FMCG Leaders Forum 2023

LEADERS FORUM 2023

which offers the opportunity to cement important changes for the industry.

All this work and our objectives clearly establish us as a voice not just for our members, but also for the wider industry.

Though we are required, first and foremost, to promote and advance the interests of our members when we liaise with government and statutory bodies and positions on legislation, regulations, by-laws and policy, in doing so as the peak industry organisation we are also influencing and championing the whole supplier industry.

With the Government set to announce a ministerial reshuffle early this year, and Commerce and Consumers Affairs Minister David Clark standing down, there will be someone new in charge of the Grocery Industry Competition Bill, and we will be watching to see if there are any changes in emphasis as a result.

Coupled with the upcoming election that will deliver either a government of a slightly different make-up to what we have now, or one that is completely different (it’s hard to see it delivering another single-party majority), that could introduce some interesting dynamics looking into 2024.

Making and reinforcing relationships with key ministers and opposition spokespeople will be critical work the Food & Grocery Council will actively pursue.

in other areas as budgets are stretched.

Finding balance in 2023

Craig Irwin Managing Director, IRI New Zealand

resilient. We are yet to hear of a significant leap in mortgage defaults and there is a view that many are still holding on to savings generated during the Covid pandemic. The counterbalance here of course is that, if inflation doesn’t show signs of easing, the Reserve Bank will continue to push rates until it does.

So, I would expect a cautious and conservative start to 2023, with many of the market dynamics we exited 2022 with still in play. Specifically, consumers actively managing expenditure – and in our industry, that means making choices of what goes in the trolley and what doesn’t.

With this in mind, my key theme for the coming year would be: Balance and focus. Balance the short term need to respond to current price-sensitive consumers with a laser like focus on the key initiatives that will accelerate your growth in the mid-longer term - Q4 2023 to 2024 and beyond – as economies rebound and rebuild. Failure to balance both the short and long term is likely to lead to underperformance.

1. Managing the short term

This focus largely hasn’t changed since I wrote my thoughts in this publication at the same time last year. Consumers are expected

execute the short term, make sure there is real business effort on the mid-long range plans that honour your mission, solving real consumer problems and will ultimately help you win. But get focused and be choiceful. What NPD will you back? What new segments will you target? What current initiatives are working for you that you can fuel even more to accelerate growth? Make choices and be ruthless with initiatives that are not working and tying up resources.

Make sure you are also investing in brand building, now. Consumer memories are short and need to be reinforced. If your sole focus is on the short term and price/promotion type initiatives, it is unlikely your brand(s) will be top of mind when the economic rebound begins which will leave your business lagging competitors.

So, in summary, another ‘interesting’ year ahead, but one that is ultimately very manageable albeit not necessarily easy! 2023 will be the year of getting back to good business disciplines – the right balance between delivering in the now/short term and investing for the future.

Find that balance and make sure any distractions/non-performing initiatives are quickly managed up or out so that resources can be prioritised to deliver the biggest impact.

NZ shoppers looking for “trusted brands” amid global uncertainty

Lance Dobson

Market Leader, NielsenIQ, New Zealand

After another turbulent year, it’s time for us to reflect, learn and move forward with fresh eyes and a renewed focus into 2023.

New Zealand’s record inflation was at the core of many conversations and decisions across the retail industry in 2022, coupled with supply chain and raw material cost challenges. These major influences are reflected in the rapid value growth felt in the industry during 2022, with corresponding volume declines as consumers paid closer attention to their overall grocery basket.

And while sentiment across both consumers and suppliers is uncomfortable and many challenges endured this year will undoubtedly carry across into next year - and possibly be accentuated - there is certainly growth to be had.

Consumer sentiment

New Zealand consumers are feeling the pinch. NielsenIQ recently reported that 89% of New Zealanders say their weekly shop costs more than it did last year and 84% said they are concerned with rising grocery prices - significantly higher than the global average of 57%.

Adding to the challenges that will undoubtedly carry across into 2023 is the largest mortgage rate increase in New Zealand’s history. This additional financial pressure will be increasingly visible as more and more fixed rates are released in the coming months.

But it is not all doom and gloom. There is always opportunity for growth, even in the most uncertain of times - it is knowing where to find it and how to capture it.

So, where’s the growth?

Trust will be at the core of any success in 2023, from both a supplier and retailer perspective.

Looking across the various NielsenIQ data sets - both locally and globally - these are the key considerations we feel will put you in good stead to leverage potential growth:

From a retailer perspective:

1. Stay in your lane. Be clear on your offer. Don’t try to be all things to all consumers.

2. Lean in to consumers’ focus on ‘saving money’ – like the PAK’nSAVE message of “don’t bother with collectibles, save money instead.”

3. Understand how and why shoppers are switching brands in response to cost pressures and most importantly, how this differs by demographic groups.

4. Don’t treat each category or brand the same… they are not.

From a brand and manufacturer perspective:

1. Stay in your lane - know your brand and product strengths and play to them.

in response to cost pressures

2. Ensure the reason for ‘being’ for your product. What is it the shopper loves and how can you ensure their trust and loyalty outweighs any price-pay decisions.

3. Get a deeper knowledge of pricing and promotion activity and the role of pack sizes in consumers’ value equations. Understanding and differentiating your pack price architecture will be key to meeting their needs.

4. Whether you’re at the value or premium end of the spectrum, it’s more critical than ever to get your proposition right.

5. As a result of increased caution across all buyer demographic groups, brands need to justify why consumers need to spend money on their brand.

Find the sweet spot between meeting consumer needs without overwhelming their weekly budget. Kiwis are re-evaluating their priorities, leading to a change in shopping behaviour. Out-of-home experiences continue to transition in-home with some permissible indulgence, tap into that.

In summary, the one thing people are looking for in uncertain times is trust. Brand trust, and retailer trust. Communicate well with your customers and be empathetic to their needs and challenges at this testing time. Those who dig deep to truly understand and match their customers’ biggest needs, will find growth.

“Understand how and why shoppers are switching brands

2023 will keep us innovating

2022 has proven to be another challenging year with Covid-related disruptions impacting our team, our operations and our communities. The arrival of Omicron put pressure on our team and our supply chain, and at times that tested our ability to meet the needs of our customers. Other challenges across the sector continue to keep us thinking about the needs of communities and customers as we operate in the increasingly complex environment that is retail grocery.

Rising inflation has driven up the cost of living for Kiwis and we continue to work hard to keep our prices as affordable as possible. This is an ongoing focus as we strive to sensitively balance the needs of our growers and suppliers facing their own cost increases, and the needs of our customers.

The weather has proven difficult at times for our growers and reminded us that climate change is here. We continue to work closely with our growers and suppliers to ensure our strong relationships are delivering the best outcomes for their businesses and our customers. The opening of our Green Star rated, stateof-the-art temperature controlled, Auckland Fresh Distribution Centre this year was a highlight. It has brought all our North Island produce operations into one location and means we can take the best possible care of our produce all the way from farm to fork.

Our incredible team of 21,000 have again focused on delivering the best experience for our customers each and every day. I’m humbled by their dedication as we work to make Kiwi lives a little better every day.

We were proud to announce our new collective employment agreement in November, which sees our store team receive an average 19% wage increase over the next two years. We also introduced new benefits including pandemic leave, an allowance for working unsociable hours, extensions to bereavement leave and earlier sick leave eligibility to better reflect the reality of working in retail grocery today.

The opening of seven new stores in 2022 has seen us grow our presences in local communities throughout Aotearoa. We celebrated with our new neighbours in Waiata Shores, Pinehill, Balclutha, Herne Bay, Belfast, Taupō South, and Alexandra as well as renewing more than ten of our existing stores.

Our digital and ecommerce capabilities have further grown in 2022 alongside our customers’ demand for the convenience and ease they offer. Our direct to boot service, where we bring customer orders directly to car boots, is now available in 19 stores and over 50 stores have dedicated pick-up areas for online customers.

Our journey towards achieving our ambitious sustainability commitments remains a key focus for our business. We are working

hard to further reduce our emissions, to send zero food waste to landfill from our stores and to make sure our Own Brand packaging is recyclable or reusable by 2025.

We also kicked off a pilot phasing out single use plastic produce bags in 20 stores, and we’ll continue to work towards further phasing out ahead of the ban taking place on 1 July 2023. In 2022, we were proud to donate more than $7 million in food, funding and sponsorship to local communities through our partnerships.

We also remain acutely aware of the role we play in helping make food and groceries affordable, even as we face unprecedented levels of cost price increases. We remain committed to playing a positive role in improving the competitiveness of New Zealand’s retail grocery market and the Government has been clear what their expectations are around this. As we’ve done from the start of the Commerce Commission’s market study, we will continue to take an engaged and constructive approach.

The signing of the first multi-store customer for our new wholesale business unit in September was an important milestone. The Grocery Industry Competition Bill has now been introduced into Parliament and we are currently reviewing it.

It’s a privilege to be a part of over 200 Kiwi communities, and that comes with responsibilities we don’t take lightly. I’m sure that 2023 will continue to challenge our operations, our thinking and keep us innovating, and our whole team is looking forward to meeting those challenges and helping deliver a better tomorrow for Aotearoa.

Spencer Sonn Managing Director, Woolworths New Zealand

zero food waste to landfill from our stores and to make sure our Own Brand packaging is recyclable or reusable by 2025.

Putting everything we’ve got into being customer driven

2022 was a massive year for New Zealanders. We were able to meet in person, we could take our masks off and adjust to life with Covid. Then the number one issue impacting Kiwis right now came along and affected every household –inflation. With the cost-of-living crisis expected to continue throughout 2023, keeping the cost of doing business down and helping our customers find value will remain a very big focus for Foodstuffs North Island.

Everyone has to buy groceries and we’re very respectful of the privilege that comes from being in every community across New Zealand.

We expect managing tight household budgets and increases in interest rates will see customers continue to look to cut back on their discretionary spend, like groceries. Between May and December 2022, Foodstuffs held food price inflation below supplier cost increases, something I’m very proud of. This year we’ll continue showing up for our customers by delivering value for money and helping them find value when they shop with us.

Our industry is always changing, and where there’s change, there’s opportunity. Having been on a study tour to North America in 2022, we got good insights on areas we can be more customer focused on in New Zealand. Linked to the search for value, frozen food is a growth area, so expect more innovation in that category and bigger frozen and chilled sections in stores. A trend that started as a result of lockdowns, people are also looking to replicate an out-of-home experience at home, for both cost reasons - and for the comfort of entertaining at home, rather than being out in crowds. The opportunity here is to provide more warm, ready-to-eat meals and some premium items.

More New Zealanders are now shopping online than what they did pre-pandemic. We know we’ve got more we can offer here,

and we will do more throughout 2023. For the last three years we’ve all had to innovate and improvise as factors outside of our control impacted global supply chains. I’m picking 2023 will see the beginning of a return to more normal levels of product availability in our stores, as our supplier partners and our teams have worked hard to develop sourcing strategies that work in the new reality.

The grocery industry is going to see some changes in 2023, with a supplier code of conduct and a grocery commissioner appointment due.

As well as the outcomes of the Grocery Industry Competition Bill, there’s a range of new regulation coming that may change how we do things in future, including how we pay our people and suppliers, and where and when we sell alcohol and tobacco. We’ll be constructively engaging and working towards outcomes that deliver for our stores, teams and customers.

It was our 100th birthday in 2022. Being around for 100 years means we have a deep responsibility when it comes to making a real, positive difference to our communities and our environment. As part of our commitment to be ‘Here for NZ’, in 2022 we partnered with community organisations opening social supermarkets in Kaitaia, Tokoroa, Whangārei and Otūmoetai. Social supermarkets offer individuals and whanau experiencing food insecurity the opportunity to shop in a supermarket-style environment with groceries usually being free of charge, or for a koha, bringing dignity to the experience. In 2023 we’ll be doubling down, opening many more social supermarkets across the motu.

We’re here to make sure New Zealanders get more out of life, it’s our reason for being, so in a nutshell, in 2023 we’ll be putting everything we’ve got into being customer driven - whatever 2023 throws at us.”

Chris Quin CEO, Foodstuffs North Island

“Where there’s change, there’s opportunity”

Feeding the South Island and creating successful communities

Mary Devine

the passion and experience of our owner operators, the strength of our brands, and our longstanding supplier partnerships, and we’ve carefully chosen the priority areas in our strategic plan to

make sure we’re continuing to provide for South Islanders through a rapidly changing industry, increased competition, and new customer preferences.

The vision for our co-op is clear. We want to be the South Island’s most loved and trusted retailer, positively impacting our customers’ lives every day. It’s a lofty goal that inspires us all and reminds us of the incredible opportunity we have to make a difference for South Islanders.

We believe that truly earning the love and trust of customers is what will enable our co-op to keep growing and providing for South Islanders for many years to come. We also believe that everything we do should go further than just satisfying customers – we want to actively make a positive impact on our customers’ lives, every day.

I’m proud to be part of our co-op team, and I’m looking forward to seeing what we deliver for South Islanders in 2023.

Future proofing to remain competitive

Andrew Mates Managing Director APAC/LATAM, Americold

Nobody could have predicted the impact of the Covid-19 pandemic on global supply chains, caused primarily by lockdowns, labour shortages, freight issues and excessive customer demand fuelled by hysteria.

While many could only see the doom and gloom of the situation, my mind flashed back to school and our studies of Albert Einstein. He was quoted as saying “In the middle of difficulty lies opportunity”, and that is how I viewed the situation, as an opportunity to take a fresh look at the management of supply chains and more importantly, how Americold operates and how to future proof our organisation.

With customers at the core of everything we do at Americold, our focus is on connecting manufacturers to retailers with temperaturecontrolled logistical solutions, and to keep New Zealanders fed through consistent flows of product onto supermarket shelves.

What are we doing to achieve this?

Firstly, we have supported our customers in moving from a just-in-time inventory model to a just-in-case model, where higher levels of stocks are held to reduce the risk of stock shortages due to future disruptions and crises. Optimised packing of pallets has had a twofold effect at Americold, saving valuable storage space and reducing the number of required pallets, which has a positive flow on effect to the environment. Visibility via our i3PL inventory management system is also key, as it allows both Americold and our customers real-time insights into the movement of inventory and potential issues, therefore reducing the risk for our customers and ultimately to the supply chain.

Secondly, Americold realised the importance of employee

retention with labour shortages. We have doubled down on investing in employee longevity through our global in-house training programmes to provide our employees with career development opportunities within our organisation. This includes programmes such as our renowned Americold Leadership Academy, in which employees are provided with a three-part course across a 12-month period that develops their leadership skills using real company case studies and internal collaboration and insights from the Senior Leaders of the organisation who kindly give their time to be involved in coaching the next leaders of Americold. At the end of 2022, we launched

‘The Igloo’, our online selfpaced learning platform that allows employees to develop their skills in their areas of choice. Our ultimate goal is to retain the rich industry knowledge and experience that our employees have. I am testament to that, having started at Americold in 1996 as a casual picker and have progressed through the ranks to now be the Managing Director of APAC/LATAM.

Finally, Americold is investing in solar power in New Zealand to counter the rising global energy costs. The average refrigerated warehouse uses approximately 25 kWh of energy per square foot for cooling costs annually. In fact, globally, cold storage organisations are the third-highest consumers of industrial energy. Through this investment, we are future proofing our organisation to remain competitive and to reduce the cost burden on our suppliers and ultimately to New Zealand families.

To learn more about Americold, visit our website www.americold.co.nz

Global Leaders

in Temperature Controlled Warehousing & Logistics

For all of your temperature controlled supply chain needs

18 sites across Australia & New Zealand

Ambient, Chiller, Freezer

Temperature options

i3PL Inventory Management

Watch out for 2023

The general end of year chit-chat seems to agree that 2022 was a tough one and that everyone is very glad it is drawing to a close.

The Covid hangover has left us with a sore head of rising inflation, scary mortgage rate increases, poor KiwiSaver returns, tumbling house prices and a weak dollar.

If you’re an employer you’re probably paying more for less as we deal with quiet quitting, high salary expectations, steep recruitment costs, and people not wanting to work at work. The cost of goods is generally increasing and it seems harder and harder to plan ahead.

The High Streets around the country are filling up with “For Lease” signs. Bank managers and the IRD are increasingly pulling the plug on struggling companies.

So then, what about 2023?

By all accounts business and consumer confidence are very bleak (now similar to GFC levels); anticipating a year that is same but worse than 2022. In a word: recession.

With an election on the horizon in 2023 the most recent polls show that there is a clear swing from Labour’s kindness economy to a more ‘roll-your-sleeves-up’ blue pragmatism.

There is also that reliable monitor of our nation’s mood coming up: the Rugby World Cup. Can the men follow the glories of the Black Ferns and lift our collective spirits? Or are we doomed to another cycle of national heartache? If 2022 is anything to go by I suggest you don’t hold your breath.

What does this all mean for the world of FMCG?

The obvious implication is that more people will be watching their pennies and seeking ways to economise as it becomes hard to make ends meet. Our already high rate of sales ‘on special’ are likely to increase further. A lot will be sticking to a budget more than before and they will be looking for keen price points in store. Value packs will look more and more attractive.

On the other side of the coin, the growth in premiumisation

witnessed over the past few years is likely to run out of steam as more expensive treats give way to necessity. “Best” will increasingly trade down to “Better” or “Good”. Category managers are likely to try and maintain profitability by pressuring supplier margins and calling for higher levels of support to generate shopper demand.

Low price operators like Pak’n Save and Costco are likely to attract more costconscious shoppers. Meanwhile, Woolworths and Foodstuffs will be coming up with more and more creative ways to say ‘everyday low price’.

The escalating cost of living is becoming a social issue that will be a major theme in the 2023 election. Apparently, there was an increase in demand for food banks by over 30% in the second quarter of 2022.

A silver lining?

Rescuing this article from the depths of despair I hope there will be some positive things to look forward to in 2023 as well. Four things I would like to see from FMCG marketers in 2023 are:

1. Give people affordable treats – In tough times simple treats help make life bearable.

2. Bust-out escapes – When we’re under pressure people typically respond with a fight, freeze, or flight response. Escape break holidays wrapped up in promotional guise will be all the more compelling in 2023.

3. Lighten the load – Empathetic marketing that recognises the pressure of the times and shifts away from the current fascination with making things easier (as in low effort), to easier to make ends meet, will earn attention.

4. Actually reward loyalty – How about turning those database driver supermarket cards into genuine rewards for loyalty? It is time they gave back with more tangible value benefits.

So, 2023 looks something like a Pandora’s Box. All the troubles of the world. And hope.

“If you’re an employer you’re probably paying more for less”

Lew Bentley

Head of Strategy, Shopper Marketing Agency Energi

Looking ahead to 2023

Kathie Bartley and Nicola McConnell

Rising input prices, labour shortages and record inflation are lining up to challenge food producers unlike anything for decades.

No matter the size of the business - from large national manufacturers to small single person operations and start ups – no food business will escape the shifting sands of 2023. In this environment every producer will have a sharp eye on cost, scrutinising every expense for value and effectiveness.

In this light, the Outstanding NZ Food Producer Awards – which celebrates its seventh year – has a record for delivering value to producers and driving sales for medal winners.

No-one says it better than food producers who have entered the Awards. Kelli-Jo Walker, founder of The Wild Fermentary said; “The Outstanding NZ Food Producer Awards medal stickers have helped us secure a number of new suppliers and are a great way to communicate credibility to customers.”

While, David Herrick founder of Foundry Chocolate said: “Winning gold medals at the Outstanding NZ Food Producer Awards in 2020 opened opportunities and started conversations with retailers that were invaluable to our little company...”

We believe creating a high impact food awards that deliver sales for entrants comes down to three key components; judging with integrity, feedback and marketing.

Judging with integrity: All products entered in the Outstanding NZ Food Producer Awards receive a fair judging from a panel of the country’s finest food industry experts – all of whom are experienced food judges.

Since beginning in 2018, Lauraine Jacobs has been head judge. With more than 50 years as one of New Zealand’s leading food writers and judges, Lauraine oversees a robust judging process.

Judging is conducted blind, meaning all products are assessed by judges without identifying brand information. This ensures all judges consider every product fairly.

Marks are awarded for the product and its ‘wow’ factor and for the producer’s sustainability practice. Every judging panel completes a judging assessment with 85% of the marks awarded for aroma, taste/ flavour and appearance, specialist sustainability judges award 10% with the final 5% allocated to brand story or ‘wow’.

Feedback: Every entry receives feedback with suggestions to enhance or improve where appropriate.

As we value judging transparency, results announcements include details on total number of entries and the number of gold, silver, bronze and no awards. Additionally, each year the head judge provides a report on judging and trends.

Marketing the Awards: The Outstanding Food Producer Awards devote significant resources to marketing across the year, ensuring

organised across the year, creating an additional tool for producers to promote their produce to engaged foodies.

All of these factors create a credible Awards programme. We recommend that any producer considering spending part of their limited marketing budget on entering Awards review the investment against these factors to ensure they are maximising their investment. Spending marketing dollars wisely has always been important; but it’s bound to take on a new significance in 2023.

Outstanding NZ Food Producer Awards Founders and Directors