Foodstuffs backdown over 3% ad levy
Foodstuffs Wellington has postponed plans to impose a 3% “promotional rebate” on suppliers.
The supermarket giant – which has the Pak’N’Save, New World and Four Square brands – had planned to implement the levy from October 1.
The charge, announced on August 28, aimed to cover the cost of advertising and marketing both in-store and by mail promotional efforts. This included them funding the supermarkets' own-label Pams or Budget brands.
However, the move sparked an outcry from suppliers, who accused the retail giant of imposing a profits grab. They also feared the rival Progressive Enterprise would impose a similar levy for its Countdown stores.
Together, the two retail giants control 95% of the domestic grocery market.
But Foodstuffs Wellington today announced a backdown, saying it needed to negotiate more with suppliers.
“We are keen to give our suppliers the assurances they need on the rebate model, and based on the feedback we have received further collaboration would be beneficial,” group communications director Antoinette Shallue says.
“We can confirm that we will not be implementing the 3% promotions rebate terms with effect from October 1 as a standard 'one size fits all' term,” she says.
“Instead. we will be engaging with our suppliers in each category over the next six months to negotiate the roll-out of this new term in a more methodical manner.”
Foodstuffs Wellington claims some suppliers actually supported the promotional levy. It already has suppliers “paying into the co-op” to fund advertising campaigns.
Such “rebate charges were not new”, Ms Shallue says, it was just suppliers were opposing “the new way of going about it.”
The Food and Grocery Council has earlier this week branded the levy plan “disappointing”, with chief executive and former National MP Katherine Rich saying suppliers are under considerable financial pressure and such a levy is too costly for them.
Ms Rich was unavailable for comment.