Foreign firms are 'ripping off Kiwis'

Last updated 05:01 06/04/2014
Countdown boss Dave Chambers
LAWRENCE SMITH/Fairfax NZ

DAVE CHAMBERS: 'These people are selling products into New Zealand at a much higher price than elsewhere.'

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Countdown claims Kiwis are being ripped off by multi-national companies charging substantially more for their products in this country than elsewhere.

Dave Chambers, managing director of Progressive Enterprises, owner of Countdown, SuperValue and Freshchoice supermarkets, said the chain's analysis of trading data showed large global suppliers were charging more here than in Australia and the UK.

Chambers' allegations follow Countdown coming under the hammer after Labour MP Shane Jones accused it in Parliament of demanding retrospective cash payments from suppliers. The company has rejected the accusations of anti-competitive behaviour with its suppliers but the Commerce Commission is investigating after receiving a number of complaints.

Chambers said transportation costs to this country had to be taken into account but the volumes his chain was importing were large enough to not warrant the sort of mark-up the global suppliers were making.

"These people are selling products into New Zealand at a much higher price than elsewhere. These are very large suppliers from all over the world and it is New Zealand consumers who suffer."

But suppliers and rival supermarket chain, Foodstuffs, take a different view. Foodstuffs group communications manager Antoinette Shallue said the idea that you can compare prices around the world and demand suppliers meet the best global price in every instance is nonsensical.

"The fact is, a dozen Bluff oysters will be cheaper in Bluff than they will be in Harrods in London. The same goes in reverse with products manufactured in Europe and sold in Europe."

The New Zealand Food & Grocery Council, which represents manufacturers and suppliers, said Chambers' claims on pricing seem like a diversionary tactic from the issues under Commerce Commission investigation.

"It is practically a cut and paste of an attack by Australian retailers when the ACCC investigated claims over there," said council chief executive Katherine Rich.

Since Progressive entered the New Zealand market there had been a big margin shift from manufacturers to retailers, Rich said. This was also the case in Australia where Macquarie analysis of the accounts of more than 40 per cent of Australia's packaged grocery suppliers found their gross margins fell on average by 15 per cent between 2006 and 2011.

"Countdown knows full well the pitfalls of comparing UK prices with New Zealand prices because there are so many variables, not the least of which is the exchange rate which is now the highest it has been for some time," Rich said.

"It would be interesting to see if fair comparisons were made in arriving at Countdown's conclusion." Ultimately, she said, it is the retailer that sets the price, not the supplier.

Chambers said Countdown had approached a number of its international suppliers, most of which have New Zealand arms, a few months ago demanding a better deal. It wanted more transparency around transport costs and comparative pricing with other markets, including its Australia parent, Woolworths.

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Negotiations were on-going but "some have settled amicably". Where he couldn't do a deal, Chambers would consider more parallel importing of goods to achieve better prices for customers.

Asked if the same changed purchasing tactics had been applied to local suppliers, Chambers replied "not yet". He then qualified that to say: "I can't honestly say if we have or haven't. We have 160 people in the merchandise team."

- Sunday Star Times

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