Clearing the air about our proposed merger

Over the past two weeks, people from across the business community have reached out to me to say they’re deeply surprised our two regional Foodstuffs co-ops have been prevented from becoming a nationwide business, just like all the other major players in our industry.

Thanks to everyone who’s been in touch - I, along with our members and teams, appreciate your support.

There’ve also been some theories and reckons floating around out there since the Commerce Commission's decision on October 1st, so I thought it might be useful to clear the air...

1. Seeking clearance for the merger is about passing a legal test, pure and simple. We took quality advice from a number of local and global experts and were confident in putting forward our proposal that it satisfied the legal test. That’s why we’ll take time to carefully read the Commission’s determination once we get to see it next week. If we appeal, it’ll be because we don’t see anything new or different to what was outlined earlier and any new basis for the decline. It’s pretty silly to suggest any appeal would be about ‘saving face’ – it’d be about doing the right thing and standing by our proposal, which we know is the best thing to do for our customers, our Owner-Operators who backed it, our supplier partners, and New Zealand.
2. Suggestions we would coordinate with any of our competitors are equally baseless, and fail to appreciate how our business works and how competitive it is. We have 60,000 products across 500+ stores and several banners (Four Square, PAK’nSAVE, New World) with different price positions. We are 100% NZ-owned by our store Owner-Operators, unlike our ASX-listed main competitor. We monitor prices in the market so we can compete hard, not co-ordinate, and we’re proud to offer a low-cost grocery option through our 58 PAK’nSAVE stores, which have a policy of offering New Zealand’s lowest food prices.
3. Extreme calls for our co-ops to be broken up ignore the benefits of having united grocers in New Zealand. Aside from the fact that it’s very hard to imagine taking our stores off the families who own them to give to some unknown future competitor, is the reality that we live in a long, sparsely populated country far from the highways of global commerce, so things cost more to get down here. As such, we have to work extra hard to keep prices affordable. Our customers benefit directly from the efficiencies gained from our Owner-Operators working together to buy from suppliers (who include many large multinationals) and then shipping it down to the bottom of the Pacific and moving it around our country.

That last point in particular is a key reason why operating as one national business, just like most major New Zealand companies and our main Aussie competitor are allowed to do, simply makes more sense than continuing as two co-ops divided by the Cook Strait.

Keeping prices down and offering a great shopping experience are our priorities, and the merger was – and still is – the best way to further reduce the costs of doing business.

We’ll be even more efficient, agile and competitive. That’s got to be good for everyone.

CQ