Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Suppliers tell of tough tactics

Progressive maintains allegations are wrong as Commerce Commission announces offical inquiry.

Photo / NZ Herald
Photo / NZ Herald

Two former suppliers have gone public on their dealings with Progressive Enterprises, claiming tough negotiations and expensive fees were required to ensure their goods were sold in supermarkets.

Progressive, owner of Countdown supermarkets, has denied accusations made in Parliament by Labour MP Shane Jones that it extorted cash payments from its suppliers by threatening not to stock their goods.

A former account manager at a major New Zealand manufacturer who dealt with Progressive backed Mr Jones. "If you are a supplier and you speak up you're history," he said. "You're cutting your own throat. When I was dealing with them they'd bring up stuff that had happened eight, 10 years ago."

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He believed most of the companies targeted had significant transtasman operations, and Progressive was probably receiving a greater return from the Australian side of the businesses.

Mr Jones, in Parliament on Wednesday, singled out a Progressive manager who he did not name.

"He's the person who's caused these dramas and I look forward to providing his identity to the Commerce Commission."

A Progressive spokeswoman said the company was confused by the allegations regarding the manager.

"Shane Jones has never come and asked us any of this information, never asked us anything."

The spokeswoman said the company rejected Mr Jones' allegations.

"The Commerce Commission has indicated they are investigating and we will fully co-operate with that. Our view is that we need to let that process take its course.

"If people feel there is illegal behaviour going on then we would encourage people to take it to the right authorities. That could be the police or the commission."

Dealing with the Progressive buyers became increasingly difficult once Woolworths purchased the company in 2005, the former account manager told the Herald.

Its first move was to insist that the more favourable terms it had with its Australian suppliers were matched by its New Zealand equivalents.

He said it then bundled all the terms of supply in together and came up with a fee suppliers would have to meet. That fee - paid through discounts on the originally agreed purchase price - had steadily increased. Additional charges for things such as promotions were also added, he said.

The total discount demanded could be up to a third of the original price.

"Thirty per cent wouldn't be unheard of," the account manager said.

Another practice, he said, was to insist on price discount promotions and not pass the full cut on to consumers.

For example, suppliers would be forced to drop their prices to Progressive by a dollar but the product would be only 50c cheaper on the shelves.

Buyers would also parallel import goods of the same brand but inferior quality and stock them on the supplier's shelf space. When the products did not sell well the supplier would be asked to help shift them "even though they hadn't bought them from us in the first place".

The account manager said dealing with the buyers became a daily nightmare that eventually drove him out of the industry.

Another former supplier, Cyril Ashby, said Progressive's tactics with suppliers were nothing new.

 Cyril Ashby.
Cyril Ashby.

He and his wife, Rachael, said their Parisette brand gourmet salad dressings had been dumped by Woolworths and Countdown after they refused to make a payment in the late 1990s.

"We were a very small company but we did manage to break into the Foodstuffs group and eventually into Progressive.. We always found Progressive more gnarly to deal with than Foodstuffs," Mr Ashby said.

In about 1999 the couple received a phone call from an Auckland-based manager requesting a payment that amounted to thousands of dollars "We were just absolutely mortified."

"There was no prospect of carrying on as we had been, and we were summarily dumped overnight."

A spokeswoman for Progressive Enterprises said the company couldn't find any details about the Ashbys' products "from 15 years ago when the company was under different ownership".

"But today, as with any commercial arrangement, there are a number of elements negotiated and agreed up front with suppliers. This includes promotional investment to help products grow and increase sales.

"Sometimes smaller vendors can find our required volumes a challenge to supply, but we work with both large and small companies to support and sell their products."

- NZ Herald

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