Foodstuffs North Island and Foodstuffs South Island have applied to the Commerce Commission for clearance to bring the two co-operatives together next year as one national co-operative.
CEO-Designate for the proposed national Foodstuffs co-operative, Chris Quin says that currently each co-operative is, at its core, a group of locally owned stores in each island supported by their own Board, management structure, and support centres.
“In our clearance application we set out why we believe combining how we’re governed, and how we support our stores, won’t substantially lessen competition in any market. We look forward to engaging with the Commerce Commission as we work through the clearance process,” Mr Quin said.
The Boards of the North and South Island co-operatives announced on 7 November that they were starting a process with their Members to consider a merger, leading to a vote on the final proposal in mid-2024.
“Combining the very best ways of doing things from each co-operative and forming one national co-operative will ultimately make us more efficient and able to deliver better value for customers at the checkout, as well for wholesale customers under the new wholesale supply regime, enhancing competition.
“If the proposed merger proceeds, we’ll continue to be a proudly 100% NZ-owned co-operative with each store individually owned and operated by a local grocer. There will be no change to the number of stores, their owners, or to our retail brands.
“A nationwide Foodstuffs co-operative will always have significant operations and leadership capabilities in Auckland, Wellington and Christchurch. All supply chain networks serving our Members and customers will remain and operate as they do now,” Mr Quin said.
Chair-Designate for the proposed national Foodstuffs co-operative, Russell McKenzie says that the co-operatives have accepted the challenge to deliver better value at the checkout. “We have been working more closely than ever on strategic national initiatives that improve our efficiency and competitiveness. As one co-operative, we can do this better and faster.
“The co-operatives share strong values and trusted brands including PAK’nSAVE, New World, Four Square, and Gilmours in the North Island, and PAK’nSAVE, New World, Four Square, Raeward Fresh, On the Spot, and Trents in the South Island.
“By operationally dividing the support services of our two co-ops by the Cook Strait as we do now, there is duplication, complexity and additional cost from operating multiple support centre and management functions to support members. In effect, this merger will bring these into a single national co-operative structure.
“In recommending that a merger be considered, the Boards have been clear it must deliver meaningful benefits for customers and all our stakeholders.
“The changes introduced under the Grocery Industry Competition Act 2023 (GICA) of increasing retail competition and the Grocery Commissioner’s role in monitoring and promoting competition in the sector, mean we will be accountable for ensuring benefits of savings and efficiencies are passed on to our customers,” Mr McKenzie said.
Subject to clearance from the Commerce Commission, each co-operative will hold a Special General Meeting in June next year where Members will vote on the proposal to merge.
The two co-operatives will continue to operate as usual throughout the merger process.
If the merger is approved, a carefully planned transition would take place to fully integrate the co-ops into one.
