‘Most trusted’ Kiwi food brand loses battle with supermarket duopoly

2026-03-11 - 22:08

Opinion: Wattie’s was founded by Sir James Wattie in Hastings, in 1934. Once, the name was synonymous with the Kiwi-grown fruit and vegetables that NZ’s families served up on their dinner tables. It regularly topped its categories in the Reader’s Digest Most Trusted Brand survey. Now, it’s getting more difficult to find the brand in supermarkets – and soon it will disappear from the freezer section almost entirely. Yesterday, Heinz Wattie’s announced plans to shut down factories in Auckland, Christchurch and Dunedin, as well as Wattie’s frozen packing lines at its famous King St factory in Hastings. The jobs of 350 people will be impacted. Behind the obvious impacts of rising supplier costs and tighter household budgets are two untold stories: the company’s difficult struggle with the supermarket duopoly, and the consequent need for its accountants to place a $211 million impairment on assets including its buildings, plant, trademarks and, most of all, its goodwill. The food producer’s battles with Chinese competitors are well-documented. At the company’s request, MBIE investigated the dumping of Chinese peaches in the NZ market, and this year ruled they were indeed being sold below cost, as first reported at Newsroom. Heinz Wattie’s domestic battles are less known. This much has never before been reported: In 2021, Wattie’s was sharply impacted by a quite cut-throat review of Foodstuffs’ frozen ranges. New World, Pak’nSave and Four Square cut back their ranges of Wattie’s frozen vegetables, chips, hash browns and the like, often replacing them with their own house brands, Pams and Budget. Heinz Wattie’s chair Mike Pretty declined to comment, but I was told the company was forced to restructure staff even back then. Two other major New Zealand food suppliers, McCain Foods and Sealord, were similarly impacted. Sealord chief executive Doug Paulin broke the news of the restructuring to staff on a Friday afternoon in October 2021, just hours after talks ended with Foodstuffs North Island. “The sales and merchandising team are gutted, managers are sad,” he told me. So this has been a long time coming. In November last year, Sealord closed its Nelson-based coated fish factory, resulting in 79 job losses. At the same time, McCain and Wattie’s both reduced the numbers of New Zealand growers they use. And now, Wattie’s is to close its frozen food and condiments factories, and further slash its suppliers – especially its peas, beans and carrots growers in Canterbury. “The decision to start this process was not taken lightly,” says managing director Andrew Donegan. “Numerous alternatives and options were explored before reaching this phase. It is a necessary step to position our company for the future.” The company has had “regular and varied discussions” with many people and departments across the Government. “They are aware of the challenges that face our industry. However, for commercial reasons, these sites are simply not sustainable.” The Commerce Commission and its successive ministers have set in place a new Grocery Supply Code that is meant to prevent supermarkets from arbitrarily deleting or “delisting” brands – but for many suppliers, it’s too little too late. “Our challenge has been to compete in a sustainable way which has been difficult in a high-cost environment.” HJ Heinz Company’s financial statements, published by the Companies Office, trace a losing battle against mounting costs. Aside from an increase in frozen food revenues at the peak of food price inflation in 2022/23, and a more recent uptick in the sales of convenience meals, the company’s revenue lines have been pretty much flat for nearly a decade. Any revenue increases were driven primarily by inflation, not by increased volumes or margins. Over the same period, the company’s payroll and supply costs rose 70 percent – clearly unsustainable. So in 2024, Pretty and his board of directors bit the bullet. The statement show it slashed 10 percent from those expenses, and brought in KraftHeinz’s Australian logistics and export boss, Donegan, to sort out the supply chains. The company’s finance team also made the big call to recognise a $211m impairment to the company’s balance sheets. It wrote down the buildings, plant, trademarks and most of all, the intangible goodwill. Explaining this in the small print, the company said it had experienced a significant decline in sales volume and budgeted gross margins resulting from shift in consumer sentiments from premium brands to other brands. To paraphrase: when the supermarkets remove your products from their chillers, or stack them in a corner behind their own Pams products, then it’s hard to maintain consumer awareness and affection for your brand. That impairment explains why the company’s expenses – and its losses – increased so sharply in 2024, even as the company tightened its belt. The company that had remained profitably through the pandemic, traced a sharp downward trajectory, $218m into the red. And it didn’t stop there. None of the financial controls have been able to prevent the seemingly inevitable. Since then, increases in the price of gas, electricity and diesel have contributed to a 40 percent increase in the cost of producing a tonne of vegetables. Alongside that, commodity prices for coffee have nearly doubled, making it unsustainable to continue producing Gregg’s instant coffee. (In these days of barista-made espressos, it’s easy to forget that instant coffee was first patented by Invercargill inventor David Strang in 1889. It didn’t really catch on until Nestlé adopted and adapted his process in 1938; the Dunedin coffee producer Gregg’s embraced it soon after.) Wattie’s and Greggs are heritage brands. Everyone knows the old TV ad: “You’ll never be a Kiwi ’til you love our Wattie’s sauce”. But the food business has never been so ruthless, and Heinz Wattie’s has made the brutal decision to reshape itself for that market. “We want to remain a sustainable business in the future and ensure that the Wattie’s brand remains part of New Zealand’s heritage.” Donegan adds: “Wattie’s has been alive for 93 years, it’s a brand that Kiwis love. What we do know is, if we don’t make these changes now, it’s going to be quite challenging to run the business for the future.”