In the first step in their planned merger, New Zealand’s two largest grocery cooperatives – Foodstuffs North Island and Foodstuffs South Island – have applied to the Commerce Commission for clearance of the deal.
If approved, the merger would create a single national cooperative structure that the businesses say would deliver better value and enhanced competition for customers and wholesale customers under a new wholesale supply regime.
The two cooperatives will continue to operate as usual throughout the merger process and the Commerce Commission says it expects to release its preliminary findings mid-next month.
Chris Quin, CEO-designate for the proposed national Foodstuffs cooperative, said that each co-op is a group of locally-owned stores on each island supported by its own board, management structure, and support centres.
“In our clearance application, we set out why we believe combining how we’re governed and how we support our stores won’t substantially lessen competition in any market,” explains Quin.
“We look forward to engaging with the Commerce Commission as we work through the clearance process.”
The boards of the North and South Island cooperatives announced last month that they were starting a process with their members to consider a merger, leading to a vote on the final proposal mid-next year.
If the proposed merger proceeds, the stores will continue to be individually owned and operated by local grocers, and there will be no change to the number of stores or retail brands.
Russell McKenzie, the designated chair for the proposed national Foodstuffs cooperative, added that currently, there are duplications, complexity, and additional costs in operating multiple support centres and management functions to support members of the two co-ops.
“As one cooperative, we can do this better and faster,” said McKenzie. “This merger will bring these into a single national cooperative structure.”
The cooperatives share brands, including Pak’nSave, New World, Four Square, And Gilmours In The North Island, And Pak’nSave, New World, Four Square, Raeward Fresh, On The Spot, And Trents in The South Island.
“In recommending that a merger be considered, the boards have been clear it must deliver meaningful benefits for customers and all our stakeholders,” McKenzie added.
“The changes introduced under the Grocery Industry Competition Act 2023 (GICA) of increasing retail competition and the Grocery Commissioner’s role in monitoring and promoting competition in the sector mean we will be accountable for ensuring benefits of savings and efficiencies are passed on to our customers.”