2022 will go down as one of the most eventful in both the history of the Food & Grocery Council and the industry as a whole. And hard on its heels, 2023 is looming as one of the most significant.
Long before I took over as chief executive in October, after Katherine Rich stepped down after 13½ years (a major event in itself), the industry was dealing with Covid and related issues, including staff shortages and international supply chain problems.
It all started in January when FGC revealed the Government was commandeering Covid Rapid Antigen Tests (RATs) imported by some member companies. This caused quite a furore but resulted in more transparency around official ordering of a product that was to become part of our everyday lives.
FGC also worked with retailers and Customs to help members smooth out the lingering kinks in the supply chain caused by the mixture of the huge pent-up demand from the lockdowns across the world, and the war in Ukraine.
Together, these pushed up fuel prices and freight costs (some of the latter by as much as 500%), as well as the prices of basic commodities such as wheat and vegetable oils (before the war, Ukraine produced 46% of the world’s cooking oils).
It was as a result of Covid that we were picking up changes to Kiwis’ supermarket shopping habits, as they tended to put more emphasis on health and healthy eating by reading labels more closely. However, once inflation really started to climb in the second half of the year, research showed some of that was undone as many began seeking cheaper staples, with private label offerings on the rise. Shopping at more than one store in search of specials also became more prevalent.
Online is now firmly part of Kiwis’ shopping options, while we’ve also seen a continuation of shoppers’ focus on sustainability that is helpful at driving better practices.
There were four major moves on sustainability during the year.
Firstly, the Government published its vision for transforming recycling: a container return scheme, where beverage containers are returned to a collection site for in exchange for a 20c refund built into the price of the drink; improved kerbside recycling, so the same materials are recycled by all councils; and separation of businesses’ food waste. This work is ongoing.
Second, FGC and the Australian Packaging Covenant Organisation have joined forces to push the uptake of the Australasian Recycling Label in New Zealand. This on-pack labelling scheme helps consumers recycle correctly and supports brand owners to design packaging that is recyclable at end-of-life.
Third, FGC and The Packaging Forum are working on a stewardship scheme that will require producers, brand owners, importers, retailers, and consumers to take responsibility for collecting and dealing with plastic packaging.
And lastly, leading food businesses have joined together in the Kai Commitment project, which helps businesses reduce food waste by identifying cost savings and new revenue streams from preventing or reusing food waste.
These are New Zealand-leading initiatives and FGC members are to be congratulated for the big part they are playing in the sustainability drive.
But the issue to rule them all in 2022 was the Grocery Market Study.
From March 8, when the Commerce Commission tabled its final report, to November 22, when the latest piece of legislation emanating from it passed its first reading in Parliament, it’s been all go.
We all now know the report delivered a very solid step forward on the issues FGC had raised over many years – that competition in the market was not working well, stifling innovation, consumer choice, and genuine competition, and creating an environment that was difficult for suppliers.
The recommendation to establish a Code of Conduct was, of course, the highlight for suppliers, but so was the recommendation to create a Grocery Commissioner with the power to monitor, seek information, and even make further recommendations to the Government should it find competition isn’t being enhanced.
These and recommendations to improve wholesale distribution and land availability to encourage new retailers, moves around promotions, and unit pricing, were all picked up by the Government, and have resulted in the Grocery Industry Competition Bill, which was introduced into Parliament in November.
And so, to 2023.
It will be a busy start for FGC, with submissions on the bill closing on January 8. FGC will be seeking to make an oral submission, which will likely be heard in February, and the select committee is due to report back to Parliament by 23 March. That’s when we’ll see with more certainty the changes that will shape the food and grocery sector into the future. The bill is expected to be passed into law around July.
Outside that, inflation is predicted to go higher and remain there for much of the year, so we can expect to see a continuation of the buying trends evident in 2022: shoppers will look for quality on selected items, while many will continue to look for specials at more than one supermarket, and many will still prefer to do it online where they can.
Thankfully, international freight rates are now dropping to more sensible levels, so there could be easing on some prices, and that would be welcomed by Kiwi families and businesses alike.
On a personal note, it’s been a great couple of months at FGC and I look forward to supporting our members and the industry through the challenges ahead in 2023.
(originally published in Supermarket News)