[ FGC ]
SURVIVING A PERFECT STORM
Katherine Rich Chief Executive NZ Food & Grocery Council www.fgc.org.nz
food& grocery COUNCIL NEW ZEALAND
The convergence of demand and supply factors not seen since the 1920s, and the most tumultuous year in the food and grocery industry’s history? They were the two abiding summaries presented to the Food & Grocery Council’s recent AGM. Chairman Mike Pretty, of Kraft Heinz (Wattie’s) was the author of the former, and I talked about the latter. Mike told members supply-side disruption in our highly-globalised environment over the past year had accelerated the impact of global shifts. He said the “phenomenal rise in the cost of doing business is probably like nothing we’ve seen before.” Everyone was facing the same issues around commodity and soaring energy prices, and the rising cost of labour and capital. Constrained supply and ingredient and component shortages caused by climate, weather, the Ukraine war, sanctions, export bans in some countries, and shipment delays were costing heavily. Domestically, there were transport issues, worker absenteeism, and labour shortages which were made worse by the impacts of Covid, such as uneven consumer demand, panic buying, and a lack of tourism and immigration. All this contributed to higher fuel and commodity prices and commodity shortages, and so to a rise in the cost of living affecting everyone. He said despite the trials and tribulations that made operating as an industry sector difficult over the past couple of years, the number of company startups and emerging brands has not abated, and the beating heart of the industry, the medium and small suppliers, is still incredibly strong. “The strength in this sector are companies who continue to innovate and invest in local brand platforms and that message is not lost on some in government, who recognise local provenance and local supply chain resilience has been tested like
never before. Having a very strong local industry has actually helped us through the worst of food shortages being felt in many countries.” I told members 2021/22 was the most tumultuous FGC and its predecessor, GMA, had ever faced as we battled with Covid challenges while contributing to the Commerce Commission’s market study. The Covid challenges were plenty, with freight and logistics issues forcing members to do things in a different way. And then, what we thought was going to be a limited process, with just one report, ended up being many different cross-submissions and a week’slong conference. I must say I’m proud of the role FGC played. It wasn’t an easy thing for an association of our size to do, but when I look at the submissions and the work we put in, we created a dossier that wasn’t just useful for furnishing the Commission’s work but in helping MBIE formulate the Code of Conduct. That’s being put together by MBIE now. We’ve had a series of meetings with them and the retailers to talk about how we take the UK and Australia Codes and New Zealand-ise them to make it appropriate for us. As I told members, I’ve been heartened by the quality and extent of the MBIE papers. They’ll be releasing a discussion document and I encourage everyone to make a submission so we can embed the Code and make sure we get something that’s really going to work. One of our next priorities will be to re-establish good working relationships with the retailers, and this has started already. It needs to happen for the good of the sector and everyone in it. NOTE: Agnes Baekelandt (Barker’s of Geraldine) and Julie North (Foodcom) have joined our Board, following the resignations of Christian Abboud, Nick Bangs, Gerry Lynch, and Peter Simmons during the year.
“HAVING A VERY STRONG LOCAL INDUSTRY HAS ACTUALLY HELPED US THROUGH THE WORST OF FOOD SHORTAGES BEING FELT IN MANY COUNTRIES.” 32
FMCG BUSINESS - JUNE 2022