Supermarket industry players have had a mixed response to the Commerce Commission’s plans to tighten the Grocery Supply Code, with one saying the changes will help “create a more transparent and equitable food system”, while another questioned whether the commission’s approach was balanced enough.
The regulator announced this morning that it would update the code to include a number of new stipulations.
That included stopping retailers from charging suppliers for stocking shelves or for groceries that become unfit for sale, as well as prohibiting retailers from retaliating against suppliers that exercise their rights under the code.
Grocery Commissioner Pierre van Heerden is worried the power imbalance between the major supermarkets and grocery suppliers “creates a reluctance among suppliers to push back on supermarket demands or behaviour for fear of damaging relationships or losing access to supermarket shelves”.
“This leads to smaller suppliers taking on costs and risks that are best managed by the retailer,” van Heerden said.
Wonky Box co-founder Angus Simms said from a fresh produce perspective regarding promotional activity, pricing is highly volatile and often difficult for the average consumer to interpret in terms of true value.
“This volatility is not just a consumer challenge – it presents a significant risk for growers as well,” Simms said.
“Unlike many FMCG [fast-moving consumer goods] producers, growers face substantial uncontrollable risks such as weather, seasonal yields and perishability. Higher margins are built into the end price as a result – and it’s the consumer who ends up paying for it.”
Wonky Box operates on a fixed-price model, removing the confusion of high-low pricing strategies. Simms said this fosters a clearer understanding of value over time.
“By removing reliance on fluctuating promotional mechanisms, we create a more transparent and equitable food system, one that better serves both producers and consumers.”
Dane Fuller, founder of Fuller Overnight Oats, said he has had a different experience with supermarkets, particularly after winning Foodstuffs Emerge in 2024.
“I haven’t had any issues and in fact I’ve found them wonderful to deal with. I was really overwhelmed to begin with because there’s a lot of stuff, a lot of corporate jargon, and when you turn up there it’s this big, beautiful building and it looks like you’re just walking into the centre of corporate world,” Fuller said.
Fuller acknowledged his experience working with Foodstuffs was quite different from others, but argued suppliers should do more to recognise the benefits of being in the system rather than out on their own.
He was critical of the Commerce Commission’s decision to go after the industry’s big players.
“When I read the Commerce Commission’s release, I don’t know that the people who are making these rules up, whether they look at it really with a balanced viewpoint, whether they have any experience whatsoever of what it’s like to be in business.
“This is capitalism, this is business. It is survival of the fittest and if you want to put your product in that supermarket then play by their rules which are currently fair and legal, and if you don’t go and sell it yourself. It’s tough but I know where I’d rather be.”
New Zealand Food and Grocery chief executive Raewyn Bleakley said she was pleased to see progress with the commission’s release of the Draft Grocery Supply Code and the preliminary findings from the Wholesale Supply Inquiry.
“These are two important pieces of work that have been under way for many months and need to be concluded to provide the industry certainty. In particular, we’re keen to see how the proposed changes to the code will give suppliers the confidence it was always meant to provide when first introduced in November 2022,” Bleakley said.
“We support efforts of the commission and minister [Nicola] Willis to ensure fairer trading relationships and healthy sustainable competition in the grocery sector. It’s encouraging to see the draft code moving in a direction that supports greater certainty, fairness and transparency in supplier relationships.”
Several of the changes proposed by the commission directly correlate with issues raised by suppliers in the Grocery Supplier Survey that took place in November 2024.
It aimed to gain more understanding of grocery suppliers, the environment they operate within, the impact of the Grocery Supply Code and their experience supplying wholesale groceries.
Several key issues were raised in the survey’s findings, particularly:
Pricing and delisting were the most frequently reported issues, affecting suppliers regardless of their size.
According to the commission, the total annual value of rebates, discounts or payments received from suppliers across all three regulated grocery retailers was more than $5 billion.
Van Heerden said the suggested changes would prevent supermarkets from charging suppliers for ordinary retailing activities and would require supermarkets to keep records of certain activities charged to suppliers, including promotions.
“We believe that setting these rules in place will help mitigate the power imbalance and allow suppliers to be more confident market participants so they can innovate and invest in better products and more choice for consumers.”
Bleakley said the council was pleased to see the inclusion of new provisions “explicitly prohibiting retaliation against suppliers for exercising their rights”, as well as the commission’s intention to prioritise better guidance for the industry.
“It’s vital that the proposed changes are carefully analysed and supported by robust evidence and we will need to take time to review the reports thoroughly and compare to our previous submissions, which raised concerns on behalf of suppliers – large and small," Bleakley added.
“We will be engaging further through the consultation process to make sure the impact on suppliers is well understood and unintended consequences for what is a complex and dynamic sector are avoided.”
The commission is seeking submissions on the draft Grocery Supply Code and will consider them before it issues its final report by the end of September 2025, with the final report on the wholesale supply inquiry likely to be completed in 2026.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.