Latest / Best of Business / Chris Quin: Foodstuffs North Island CEO on farmers raising questions over supermarket food prices

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Chris Quin: Foodstuffs North Island CEO on farmers raising questions over supermarket food prices · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk SEDB. Follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio. Now.
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  Speaker 2: We've been discussing on the show in the last week.
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  Speaker 2: One of the questions that's arisen since the McCain closure,
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  Speaker 2: who's making the money? And this has come from a
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  Speaker 2: Hawk's Bay farmer who says that he sells one KGFPS
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  Speaker 2: for a dollar seventy and that ends up on Pack
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  Speaker 2: and Save shelves at five dollars seventy nine. Food Stuff's
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  Speaker 2: North Island owners of Pack and Save Chief executive Chris
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  Speaker 2: Quinn is with us.
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  Speaker 3: Hello Chris, afternoon, Heather.
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  Speaker 2: So, how do we explain that one dollar seventy becomes
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  Speaker 2: five dollars seventy nine.
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  Speaker 3: Look, we've been saying for some time here that basically
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  Speaker 3: of a retail dollar as the supermarket, our owners and
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  Speaker 3: Edgital's emergently owned, get about nineteen cents out of each
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  Speaker 3: retail dollar. So went trawling through the Pack and Saved
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  Speaker 3: freezers to have a look at the peas and basically
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  Speaker 3: a kilo of pas we retail between five dollars twenty
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  Speaker 3: nine at normal price and three dollars forty nine on
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  Speaker 3: special so if you mix that up, it's about four
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  Speaker 3: dollars thirty five on average. You take gst off that
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  Speaker 3: you get three seventy eight. Those bags a peace cost
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  Speaker 3: us about three dollars to buy into store, So that
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  Speaker 3: brings you back to about eighteen or nineteen cents. And
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  Speaker 3: the dollar is what the supermarket earns. And there's been
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  Speaker 3: months of studies on this industry so that are looking
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  Speaker 3: at that and proving that out.
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  Speaker 2: Right, so you'll use it the five dollars you're basically
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  Speaker 2: ignoring the five dollars seventy nine figure in that right.
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  Speaker 3: Well, because it's five twenty nine's are normal retail, So
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  Speaker 3: I don't know if we're five seventy nine.
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  Speaker 2: Maybe maybe it was a tough day.
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  Speaker 3: Tough Yeah, I think we did a find a mixed
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  Speaker 3: veggie's bag for five seventy nine, so maybe that's the
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  Speaker 3: one perhaps, So all.
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  Speaker 2: Right, but even then, I mean, if he if he's
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  Speaker 2: basically selling it for a dollar seventy and you'll buy,
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  Speaker 2: you're buying it for three dollars. There's only a dollar thirty,
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  Speaker 2: which explains all of the processing and whatnot that has
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  Speaker 2: to happen with McCain's and the transporting and stuff. So
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  Speaker 2: it looks to me like nobody's making much of a
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  Speaker 2: buck here.
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  Speaker 3: Well, it's certainly not easy, and I think that's certainly.
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  Speaker 3: You know what we're seeing with mccains and what is
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  Speaker 3: pretty tragic news in terms of viability for them. And
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  Speaker 3: I think when you read their stories, the energy costs,
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  Speaker 3: compliance and regulation costs, the transport costs, that are all
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  Speaker 3: what's working against everybody in the industry at the moment.
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  Speaker 3: And you know, we're seeing diesel more than double in
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  Speaker 3: price in four or five weeks at the moment, and
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  Speaker 3: this is putting pressure on the food system.
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  Speaker 2: Do you think that this is inevitable, Chris? If you
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  Speaker 2: look around the country and you see the various closures mccains,
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  Speaker 2: heinz watties, and see what we are prepared to pay
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  Speaker 2: for things on the shelves and our preference obviously for
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  Speaker 2: cheaper means stuff that's important. Is it just inevitable that
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  Speaker 2: the likes of mccains will close.
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  Speaker 3: Look, I hope it's not inevitable, because we're really value
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  Speaker 3: on New Zealand growers and New Zealand desperately needs more
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  Speaker 3: valuated businesses in New Zealand generating the jobs in generating.
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  Speaker 2: That way, but with respect. Hoping for something is not
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  Speaker 2: the same as the reality of it. So what do
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  Speaker 2: you think is it inevitable that this happens.
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  Speaker 3: I don't think it's inevitable. I think we've got to
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  Speaker 3: focus on. Yeah, what we've got to focus on is
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  Speaker 3: how do we be as efficient as we possibly can
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  Speaker 3: in a country of our size and density. I keep
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  Speaker 3: thinking we're the same size as Japan with one hundred
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  Speaker 3: and thirty five million less people. So we've got to
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  Speaker 3: think about how to all of our regulations and all
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  Speaker 3: of our systems and processes make us as lean and
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  Speaker 3: as competitive as we can, and keep thinking about designing
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  Speaker 3: for hair, not for somewhere else.
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  Speaker 2: So what do you think I mean? We get told
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  Speaker 2: there are three main cost pressures that I understand, the
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  Speaker 2: likes of McCain's is facing right. Obviously, one is energy.
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  Speaker 2: The other one is the minimum wage and the fact
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  Speaker 2: that the minimum wage that we pay in this country
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  Speaker 2: is the third highest in the world. And then the
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  Speaker 2: other one is the red tape. Of the three of them,
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  Speaker 2: which is the biggest pressure.
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  Speaker 3: Look, I think most people would say energy has been
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  Speaker 3: a huge pressure in the last year or Two. I
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  Speaker 3: think red tape. You know that if you look at
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  Speaker 3: and go what could you work on as a country,
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  Speaker 3: I think you can work on energy and red.
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  Speaker 2: Tape minimum wage.
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  Speaker 3: Third one, well, people have got to be able to
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  Speaker 3: have a decent standard of living and to be paid fairly.
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  Speaker 3: So you'd like to think what we can do is
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  Speaker 3: have more valuable jobs, not less.
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  Speaker 2: Now, what I've noticed is that there's been a little
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  Speaker 2: bit of winging in winging is not fair. There's been
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  Speaker 2: a bit of complaining in New Zealand from the farmers,
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  Speaker 2: but I say's really quite intense from the Aussie farmers
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  Speaker 2: about what the supermarkets in Australia and New Zealand are doing.
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  Speaker 2: And this is really the home brand. Are you, guys,
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  Speaker 2: by pricing your home brand so low and using product
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  Speaker 2: that is imported rather than local stuff, are you essentially
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  Speaker 2: driving now local guys out of business?
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  Speaker 3: Well, I think first thing, you know, just a fact
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  Speaker 3: that's useful for people to know. Sixty eight percent of
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  Speaker 3: what we do in home brand comes from New Zealand suppliers.
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  Speaker 3: And the idea of home brand is that you don't
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  Speaker 3: invest the money in the brand and marketing that it's
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  Speaker 3: good quality, but it's specified to different levels. You know,
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  Speaker 3: there's a value one, a medium one and a finest way.
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  Speaker 3: And the idea is that you know, we don't make
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  Speaker 3: it ourselves the manufacturer. Of the manufacturers generally people like
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  Speaker 3: waddi Is and the Caves, and we have parted with
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  Speaker 3: both of them on private label. But the idea is
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  Speaker 3: to offer our customers an option that doesn't have all
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  Speaker 3: of the brand and other marketing associated with it, but
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  Speaker 3: is a good, honest, quality product on shelf and so
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  Speaker 3: that there is an alternative for customers and we see
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  Speaker 3: them liking it, particularly in the last few years when
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  Speaker 3: cost of living has been really tough.
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  Speaker 2: What's up with I was reading newsroom this morning, so
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  Speaker 2: that you guys are using in bringing in Tasmanian salmon
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  Speaker 2: in place of New Zealand salmon.
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  Speaker 1: Why is that?
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  Speaker 3: It's to offer the option again? So you know, New
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  Speaker 3: Zealand salmon is doing incredibly well on export markets and
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  Speaker 3: that's great because that's great for our salmon farming businesses.
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  Speaker 3: That means that the export price is also what you
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  Speaker 3: need to pay here for that particular product. So we're
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  Speaker 3: trying to make sure we've got alternative products at different
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  Speaker 3: price levels and then most importantly, just give customers the choices.
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  Speaker 2: All right, Chris, it's always good to talk to you.
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  Speaker 2: Thank you for making the time to have a chat
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  Speaker 2: to us. It's Chris Quinn who is the boss of
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  Speaker 2: food Stuff's North Island.
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