A fast fall for grocery start up as grocery tsar reveals priorities

Grocery start up Supie went into voluntary administration yesterday. Talk has turned to the difficulties of taking on the supermarket duopoly as the grocery commissioner says a fix won't be quick

Oct 30, 2023

Mōrena, and welcome to The Bulletin for Tuesday, October 31, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.

In today’s edition: National canvassing alternative water reform models; police admit mistake in call-handling in lead up to mosque attacks; verdict in Whakaari/White Island trial expected today; but first, online grocery company Supie put into voluntary redundancy, staff unlikely to get paid

Supie founder Sarah Balle, centre, with Supie staff (Image: supplied)

A fast fall

Sarah Balle’s online grocery company Supie had become something of a symbol of resistance — a David against the Goliaths. A cost of living crisis, a desire to see more competition in our grocery sector and Balle’s advocacy made the company a heroic alternative to the dominant duopoly. In July, the company revealed plans to open high-tech physical stores in the coming year. Two weeks ago, Balle revealed she was confident (paywalled) the start up was on track to reach profitability and 100,000 members in the next 12 months, with 72,000 members as of October. Just last week, Balle told Stuff the small retailer had expansion plans beyond Auckland, Waikato and Tauranga. Six days ago, Supie posted a job ad on Seek for a produce business manager. Yesterday it was announced that the company was being put into voluntary administration after it failed to raise $3m from investors in August with $1.1m already committed. According to the NBR’s Hamish McNicol (paywalled), a key investor pulled support. Two board members resigned last Friday.

Supie staff unlikely to be paid

There is undoubtedly more to come out in the wash, but voluntary administrator PWC's Richard Nacey said early work indicates 400 creditors are owed about $3m. The chances of the 120 Supie staff being paid for the last two weeks of work, their annual leave entitlements or redundancy pay, are slim. Staff members have told the Herald (paywalled) that all company assets are registered under Supie, while staff were paid by another company, Workerly. Supie supplier Neat Meat is owed $14k. Speaking to RNZ’s Checkpoint last night, managing director Simon Eriksen didn’t sound confident about recovering the money but did say they’d reached out to Supie’s employees to say Neat Meat was looking for staff and were talking to some of them now about possible employment.

‘All discussion should centre on a structural break up of the supermarkets’

It hasn’t taken long for talk of the lack of competition and the duopoly to rear its head. Balle was a vocal advocate for the government doing more to support smaller players, speaking to BusinessDesk (paywalled) about that two weeks ago. Competition advocate Tex Edwards says that while he did not want to comment on Supie’s funding push and whether the startup was undercapitalised, “all discussion should centre on a structural break up of the supermarkets.” Edwards has previously suggested it would take at least $1.1b in capital to take on the incumbent players, Foodstuffs and Woolworths, who have a combined market share of 90%. In accidental timing that seemed a little too on the nose, new Grocery Commissioner Pierre van Heerden outlined his priorities for fostering competition in New Zealand’s $25 billion supermarket sector yesterday. Speaking to Stuff’s Aimee Shaw, van Heerden, who has been on the job for just over 100 days, said he was focused on fixing misleading pricing, reducing the influence of suppliers and lowering barriers to entry for new players. van Heerden says he knew there was a lot of expectation that he should bring about change fast, but it needed to be sustainable.

Old habits die hard?

While shopping for groceries online surged during Covid lockdowns, and Countdown/Woolworths NZ has recently relaunched a failed grocery delivery service powered by Uber, questions are emerging overseas about online grocery habits and growth potential in a post-pandemic world amid a cost of living crisis. In Australia, online grocery shopping peaked during the pandemic, with consumers spending about $4.4b every month online. That's back to between $3.6 to $3.7b every month. Australians also have access to e-commerce giant Amazon for groceries. A YouGov survey in late 2022 showed that the one category bucking the online shopping trend was grocery, with 60% of people across multiple countries saying they preferred to shop in person. The Business Times reported (paywalled) on the failure of online grocery delivery businesses in Singapore and Indonesia in January this year, concluding that despite the convenience it offers consumers, it was yet to prove itself as a good investment.

The future of water reform

Repealing the Three Waters legislation (or the Affordable Water reforms as they were hastily renamed) is on National’s list for its first 100 days of government. As Newsroom Pro’s Jono Milne reports, the party has been canvassing for alternative models that can be enabled by new legislation to replace the laws the party will repeal. As Milne notes, it can not ignore some realities. The status quo is not sustainable, the cost of maintaining and investing in water infrastructure has become too high for many councils to bear on their own, and it must be “acceptable to the Act party and New Zealand First, and to as many councils and ratepayers as possible”. Comments by National's infrastructure spokesperson, Chris Bishop, suggest a council-controlled organisation model, where regional entities, co-owned by one or more councils, own water assets like the pipes and charge ratepayers for their use. Bishop cites the Wellington Water as an example of what he doesn't want to see, a regional organisation, yes, but one where the six councils retained ownership of assets, debt and revenue. “I don’t care what it is called but I want the assets off the councils and into a new organisation, with the quality and price regulation in our model,” he told Newsroom. Milne outlines three possible models that fit within the principles National campaigned on. As to who might hold some of the relevant portfolios, Newsroom’s Jo Moir has a run down on where those ministerial chips might land.

Call about terrorist’s plans should have been upgraded

As the inquest into the March 2019 mosque attacks entered its second week yesterday, Bret Watkins, team leader in the Police Southern Communications Centre at the time of the attack, gave evidence. Watkins admitted that a call containing vital information about the Christchurch terrorist's plans should have been treated with the highest priority and shared widely among the police. Last week, it was revealed that dispatchers and senior officers missed information due to its '“priority 2” status. Under cross-examination, Watkins said he should have acted on the parliamentary staffer's call after the supervisor told him about it and upgraded it to a priority 1 call. Staff he had tasked to read through all event chronologies to find any vital information would have then seen the entries from the call-taker, including “Linwood mosque is potential danger”. He agreed that information was vital and, as counsel assisting the coroner David Boldt said, been “shouted from the rooftops”.

Click and Collect

Verdict on the sole company left facing health and safety charges relating to the Whakaari/White Island disaster expected today
Heavy rain warnings still in place for Coromandel, Bay of Plenty and Gisborne areas
Mountains in Auckland will be closed in the lead-up to Guy Fawkes night to protect them from fire damage
SkyCity chairman says the company will probably admit allegations that its Australian casino operation breached anti-money laundering laws
Demolition on Hamilton’s Founders Theatre will begin at the end of this week
How sustainable is the current state of play for musicians in New Zealand, and is it time for an industry shake-up?

Right now on The Spinoff

They’re big, they’re bold, and they’re everywhere – then all of a sudden, they’re gone. Dylan Jones investigates where hoardings go when the election is over. Stewart Sowman-Lund writes that while David Seymour’s media silence is a relief, it’s also deafening. Shanti Mathias asks if pouring money into start-up accelerators is working. Peter Reynolds explains why fair pay for health and disability support workers is essential. Sam Brooks asks why nobody in New Zealand has heard of Path of Exile, a game developed by a New Zealand company. Sam Brooks also has your weekly guide to what to watch on on Netflix, Neon and more this week.

Sporting snippets

It's not Wayne Barnes' fault, says All Blacks coach Ian Foster
- Big read from the Herald’s Liam Napier on Ian Foster’s legacy (paywalled)
- Ardie Savea named World Rugby player of the year and former Black Ferns Sevens player Tyla Nathan-Wong named women's sevens player of the year
Outgoing Wallabies coach Eddie Jones told Peter FitzSimons in an off the record chat (paywalled, Sydney Morning Herald) that he had lost belief that Rugby Australia would deliver the resources he needed to turn the Wallabies around.
- Who is in the running to replace Jones?
A New Zealand team did win a global competition on Sunday morning; it just wasn’t the All Blacks