Foodstuffs’ grocers vote to merge its two co-ops

Chief executive of Foodstuffs North Island, Chris Quin. Foodstuffs brands include Pak'nSave, New World and Four Square.

By RNZ

A proposal by the country’s biggest supermarket operator Foodstuffs to merge its North and South Island divisions has been supported by the grocery store owners, who are the co-ops’ shareholders.

The boards of Foodstuffs North and South Island currently operate as separate co-ops and run a number of well-known brands including New World, Pak’nSave and Four Square.

Chris Quin, the designate chief executive of the proposed national Foodstuffs co-op, said the result was a major milestone in the merger process.

The merger is still subject to Commerce Commission and High Court approval.

Quin said New Zealanders were looking for Foodstuffs “to deliver more value and innovation” and it could do that “better and faster” as one national co-op.

Foodstuffs continued to work constructively with the Commerce Commission to get clearance for the merger to go ahead, he said.

It was important that Foodstuffs could get to a position where it could be clear with its members, he said.

“It’s really important we get ourselves to a position where we can be clear with them about the merger, about its timeframe and very carefully over the next couple of years implement the right structure for the future as one Foodstuffs.”

The merger would benefit customers in terms of greater value, innovation and competitiveness, he said.

“The merger would change how we’re governed and how we support our stores - reducing the complexity, duplication, and cost of running two co-ops,” Quin said in a statement.

The merger would not change the number of stores, distribution centres, local grocer owners or brands, he said.

Foodstuff’s members voted in favour of the merger because they could see the benefits for everyone, he said.

“They know we can become more efficient, we can get things done faster and we can compete with anyone by making this go ahead.”

The more than 500 Foodstuffs stores were 100 per cent New Zealand owned, he said.

“That’s a great thing for New Zealand as too few of our key industries remain New Zealand owned, and we’re up against Australasian and global competitors.”

Chair designate Russell McKenzie, who is also a Christchurch supermarket owner-operator, said getting members’ support was significant.

It showed the members strongly supported the goal to become the best grocery co-op in the world, he said.

Commerce Commission concerns

In April, the Commerce Commission said it was concerned that if Foodstuffs became a single grocery entity it would further reduce competition in the market.

It was concerned there was also potential for a merged Foodstuffs to co-ordinate with the other large national grocer, Woolworths, to get lower prices and more favourable trade terms from suppliers.

However, the Commerce Commission said it would give clearance to the proposed merger if it could be satisfied that it was “unlikely to have the effect of substantially lessening competition in the market”.