Foodstuffs boss Chris Quin says supermarket losing money on some butter products

The head of supermarket giant Foodstuffs says the co-op is losing money on some of its butter products amid rising costs.

Foodstuffs North Island CEO Chris Quin told Herald NOW’s Ryan Bridge that everyone recognises how much the price of butter has gone up.

“We are investing in some of our butter products to make sure they sit at a fair price on shelf as much as we can.

“That means we lose money on some of them.

“The most volume-moving ones, the private label ones, tend to be where we [lose money].”

Foodstuffs recently published data showing retail prices across its stores rose 3.4% year on year in July, compared with Stats NZ’s latest annual food price inflation (FPI) figure of 5% over the same period.

The supermarket said its “comparable FPI basket of products” was lower than Stats NZ’s FPI for the fifth consecutive month.

“When you add it all up across our supermarket, we make 3.6c out of every dollar in profit after tax,” Quin said.

Quizzed about Finance Minister Nicola Willis’ threat of “structural separation” of the supermarket duopoly, Quin said they would fight tooth and nail to protect its co-op business owners.

“We firmly don’t believe [forced separation] will make sense from a New Zealand consumer point of view.”

Quin said the “fundamental mission” was how to make food prices as affordable as possible.

“We had a look at some information that was shared in the recent Annual Grocery Report, and whilst, yes, we sit slightly above the average OECD line [for prices], we sit as the lowest prices of countries that have less than 20 million people.

“So, you’ve got to recognise that with a country [the] same size as Japan, and with only 5.4 million people, you have some challenges around scale and cost.

“And when you know that 68c of every dollar is the cost of the product to us, then when you look at where could we make a difference to food prices, you’ve got to look at the cost of doing business in the whole of New Zealand.

“Something like making organisations smaller with less scale and more overhead would not help the cost of doing business in New Zealand from a retail point of view.”

The second Annual Grocery Report, released by the Commerce Commission earlier this month, found that while some progress has been made in the sector, many of the issues already identified continue to stifle significant improvement in competition.

New Zealand shoppers paid 3% more than the OECD average for their groceries in 2023, the report said.

The report also found barriers to entry for new competitors remain, while the major supermarket chains (run by Foodstuffs and Woolworths) continue to wield their power over smaller suppliers.