Foodstuffs Grocery Store Owners Approve Historic Merger of North and South Island Divisions

In a historic vote, Foodstuffs North Island and Foodstuffs South Island grocery store owners have overwhelmingly supported a merger to form a single national co-op, led by designate CEO Chris Quin. The proposed merger, announced in November 2023, aims to deliver meaningful benefits to customers, members, teams, suppliers, and communities.

The merger received strong support from Foodstuffs members, with the outcome subject to Commerce Commission and High Court approval. Chris Quin, the CEO-designate, emphasized the importance of this move, stating, "This is a great day for our co-ops. New Zealanders want us to deliver more value and innovation. We're up for this, and as one national co-op, we can do this faster and better."

The merged co-op will operate as a single national business, reducing complexity, duplication, and costs. The merger will not change the number of stores or distribution centers, local grocer owners, trusted brands, or the fact that all profits are returned to New Zealanders. Foodstuffs operates over 500 stores across the country, including well-known brands such as New World, Pak'nSave, and Four Square.

Why this matters: This merger has significant implications for the New Zealand grocery market, potentially affecting prices, competition, and the overall shopping experience for consumers. The success of this merger could also have a ripple effect on other industries, encouraging similar consolidations and changes in business models.

The vote took place on June 4, 2024, with 99% of store owners voting in favor of the merger. This overwhelming support reflects the co-op members' belief in the benefits of a unified national entity. Russell McKenzie, the Chair-designate, expressed confidence in the merger's potential, stating, "The merger is driven by an ambitious goal for the future – to become the best grocery co-op in the world, owned by the best local grocery retailers and wholesalers, delivering the best experience and value to New Zealanders."

The merger aims to improve efficiency, reduce costs, and enhance competitiveness in the market. Chris Quin highlighted the need to challenge every aspect of their business model to ensure efficiency and deliver great prices at the checkout. He stated, "We have to challenge every aspect of our business model to be as efficient as we can because our number one job is delivering great prices at the checkout."

The Commerce Commission has expressed concerns that the merger could reduce competition in the market. However, the Commission has indicated that it would give clearance if it can be satisfied that the merger is unlikely to substantially lessen competition. Foodstuffs continues to work constructively with the Commission to address these concerns and obtain clearance for the merger.

The proposed national co-op will be 100% New Zealand owned, with all profits returned to New Zealanders. The merger will not change the number of stores, distribution centers, local grocer owners, or brands. Foodstuffs is committed to investing in local communities, with ongoing store openings and investments in towns across New Zealand.

Foodstuffs aims to implement the new structure over the next couple of years, pending regulatory approval, as the merger process moves forward. Chris Quin emphasized the importance of clear communication and careful implementation, stating, "It's really important we get ourselves to a position where we can be clear with [our members] 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 successful vote marks a significant step towards creating a more efficient and competitive Foodstuffs, set to deliver greater value and innovation to New Zealanders.

Key Takeaways

• Foodstuffs North Island and South Island owners vote to merge into a single national co-op.
• 99% of store owners support the merger, pending Commerce Commission and High Court approval.
• The merged co-op aims to reduce complexity, costs, and enhance competitiveness.
• The merger will not change store numbers, distribution centers, local owners, or brands.
• The new co-op will be 100% NZ-owned, with all profits returned to NZers.