6 Apr 2023

Online grocery retailer says suppliers pressuring them to increase prices

1:06 pm on 6 April 2023
Supie founder Sarah Balle.

The founder of the online grocery start-up Supie Sarah Balle. Photo: Maegan McDowell Photography / Supplied promotional image

An online grocery start-up is standing firm after it said it faced pushback from multiple suppliers about their retail prices.

Supie, which was launched in 2021, said a number of suppliers reached out to them concerned that their prices were too competitive with the duopoly of Countdown and Foodstuffs.

The business, which operates out of Auckland, said the suppliers demanded Supie increase their retail pricing, despite their "reasonable profit margins".

It said the request from suppliers likely breached competition laws and was "clearly price-fixing".

Supie founder Sarah Balle said the approaches from suppliers came after the company implemented a more competitive pricing strategy in January.

"We're not entirely sure why suppliers are putting pressure on us. We know there is a duopoly market in New Zealand," she said.

"We can't confirm that the duopoly are putting pressure on our suppliers, but for them [suppliers] to request us to increase our retail prices means that there is some pressure coming from somewhere."

The company said it preferred an educational approach with suppliers which requested retail price increases.

"We let them know about their obligations as part of the resale price maintenance, which is what the Commerce Commission has on their website," Balle said.

Supie has also asked the Food and Grocery Council to remind suppliers about their obligations.

The New Zealand Food and Grocery Council (NZFGC) said no suppliers had yet reported to them any pressure on pricing from the major retailers.

"This is a highly competitive market and suppliers are under pressure on many fronts, which means they have to be more mindful of what they can and cannot do," chief executive Raewyn Bleakley said in a statement.

NZFGC members had been reminded of their obligations under the law and provided with guidance from the Commerce Commission on the issue, Bleakley said.

"The issue of resale price maintenance is a serious infringement of the Commerce Act - even if it is due to retailer pressure - and we were concerned to urgently make sure the supplier sector understands this and its obligations around it.

"In addition, we will be running a webinar later this month on this issue, as well as on the Commission's recent guidance on the misuse of power."

Balle said the messages from suppliers showed the importance of the company's success in the grocery market.

"I think it really shows how important competitors are in this market, like us, and of course, The Warehouse, who have now entered into grocery as well."

Last month, The Warehouse said it was unable to secure a competitive wholesale arrangement with either of the two big supermarket chains.

Supie ready to expand

Supie said it was set to expand outside of Auckland for the first time, with Waikato next in line.

The company already had an agreement with The Warehouse to sell its goods nationwide on The Market website.

"We're so close to breaking even and we're looking for a small raise to help us get there," Balle said.

"We are having a few conversations at the moment with a few of our partners, but really looking forward to closing that out so that we can continue on our mission of ensuring that we're providing affordable groceries for all Kiwis."

Supie was also eyeing the Bay of Plenty for expansion.

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