Jobs at Sealord's Nelson plant are understood to be on the line, after Foodstuffs North Island's decision to "delete" most of the New Zealand fishing company's frozen products. Food and Grocery Council chief executive Katherine Rich said the decision would shrink Sealord's 80 percent local market share to less than 20 percent, turning it into a market minnow and making more space in the supermarket freezers for overseas products like Alaskan pollock instead. The Foodstuffs decision is a bold one, at a time when it's engaging with a Commerce Commission market study, with allegations of anti-competitive behaviour by the supermarket chains. This week the commission is to publish its agenda for hearings. There are concerns that Foodstuffs and Woolworths are pushing up food prices at the same time as producers are paid less. It will hear evidence on improving conditions for entry and expansion, including site availability; improving access to products at the wholesale level, and directly improving retail competition in grocery markets. The hearings begin next week. This is a time when Foodstuffs might be expected to play nice. But this latest news shows Foodstuffs' confidence to flex its muscles. Its ambitions extend beyond food to liquor, pharmaceuticals, and even diversifying into housing, with the fast-track consent approval this month of a new retail and residential development in Dominion Rd, Auckland.
Sealord staff have been told the removal of most of their frozen products from New World and Pak'nSave will take effect from November 15. Rich described the decision to remove the Sealord frozen ranges as the best example in 20 years of the detrimental impact of the duopoly. "Last week it announced plans to decimate – and I do not use that word lightly – the range of market leader Sealord Group Ltd, a decision that will delete most of their frozen products from New Worlds and Pak'nSaves, removing major choice from consumers." She said the range of frozen goods was being cut from 1600 to about 1000 at New World, and down to 600-700 at Pak'nSave. Those ranges that remained were not decided according to customer demand, affordability, quality or local sourcing, but purely on the basis of the profit margin they returned to the supermarket chain. Rich said Sealord had offered to increase Foodstuffs' profit margin by 50 percent, but this wasn't enough to satisfy the retailer. "Most New Zealand consumers believe we have the best fish in the world and so it's no surprise that Sealord's fish is the market leader and most preferred brand in NZ supermarket freezers." She said Pam's Alaskan pollock, processed in China and imported to New Zealand, was not substitutable for New Zealand-caught fish. “This belies sense, knowledge of market trends and New Zealand consumer sentiment regarding local species and provenance. "Our industry has never experienced such an extreme margin grab. It's quite extraordinary at the time they are in the Commerce Commission spotlight. They're snubbing their nose at the commission and government’s process."
Foodstuffs also owns its own New Zealand fishing company. Two years ago, the supermarket chain purchased Leigh Fisheries and the Lee Fish brand. At the time of the takeover, the companies said Leigh Fisheries had a total of 53 independent boats fishing catching lobster, snapper, john dory, bluenose, and groper, as well as long-line tuna boats fishing for southern bluefin tuna and swordfish. Somewhat ironically, New World features Sealord on the "support our locals" page of its website, highlighting that the company was established in 1961 and is half-owned by iwi. "We are passionate about bringing quality seafood to our customers in New Zealand and around the world," the website says. It's another blow for Sealord, after China suspended exports from the Nelson plant that processes finfish and fishmeal, citing Covid-19 hygiene food safety fears. Chief executive Doug Paulin says that suspension has cost it $3 million. In a statement to Newsroom, Paulin said Sealord had been negotiating with Foodstuffs North Island as part of their freezer review, which was itself part of a larger review across their stores. "These discussions concluded last week and Sealord was informed that the outcome was a significant reduction in our range despite Sealord’s sizeable market share, which will undoubtedly adversely impact our retail sales in all their stores, which would then have follow on impacts for our operations in New Zealand," he said. "We are seeking clarity on Foodstuff North Island’s rationale for this decision. We also reached out to the Food and Grocery Council as the industry body, to understand if there have been similar supplier outcomes. "We don’t have anything else to comment on until we have complete understanding of Foodstuffs North Island’s position.”
Jocelyn McCallum, Foodstuffs North Island’s head of grocery, food and frozen, said the company's priority was to find and offer to its customers the best value it could. "Our range review process has been guided by a range of customer data and insights to deepen our understanding of customer needs, customer loyalty, brand loyalty and customers’ willingness to buy alternative products within a category." She said there was "significant duplication of products" within the frozen fish category. They had started with 62 products. One fifth of those accounted for four-fifths of sales. "Our goal is to ensure we are offering our customers products that meet their needs and this means removing duplication in the range to enable more choices for customers. "It's not correct to say Sealord’s range has been decimated. We have kept their products that our customers tell us are most important to them and these represent over 70 percent of Sealord’s current frozen range sales with us. From a share of shelf position this is approximately 30 percent in New World and 35 percent in Pak'nSave." Katherine Rich says these products represent just half of Sealord's frozen sales; McCallum said they represented 70 percent. "We struggle to see how a change of this size puts jobs at risk as claimed,” McCallum said. McCallum said the priority was to offer options that provided locally-caught fish as the raw material source and by far the majority of the category continued to be. Foodstuffs North Island’s commitment to sustainable locally caught fish was demonstrated by its 100 percent ownership of Leigh Fisheries, she said. The frozen goods range review comes after Newsroom revealed range reviews across other products, such as Foodstuffs North Island's decision to reduce its range of breakfast cereals from 500-plus products down to about 200.