Sealord staff ‘gutted’ as company announces staff restructuring after failed talks with New World and Pak’nSave cost it $5 million in revenues.
Two of New Zealand’s biggest food producers are preparing to restructure or potentially lay off staff in response to Foodstuffs North Island cuts to their ranges and merchandising agreements.
McCain Foods is understood to be pulling six to eight merchandising staff out of the supermarkets but hopes to redeploy them; Sealord has more sales and merchandising workers affected and is expected to cut jobs.
This Sunday, Sealord marks its 60th birthday. The company’s chief executive Doug Paulin broke the news of the restructuring to staff on Friday afternoon, just hours after talks ended with Foodstuffs North Island. “The sales and merchandising team are gutted, managers are sad,” he told Newsroom. “For the people that are impacted, obviously it’s difficult to differentiate the impact on you versus it just being a commercial negotiation.”
Sealord expects to lose about $5 million in sales revenue. Its range of New Zealand hoki and other fish, caught by its fleet out to New Zealand’s 200-mile limit, will mainly be replaced by Chinese-processed Alaskan pollock, under the Pam’s brand, and Birds Eye frozen fish products imported from Australia. Paulin expected the Pam’s Alaskan pollock rance would get more facings (freezer space) and said it would be interesting to see whether that converted to consumer sales.
Birds Eye products are now labelled as Alaskan pollock or New Zealand hoki. But after Newsroom revealed the cuts to the Sealord range last week, Foodstuffs confirmed a deal for Birds Eye to supply it with more Australian-processed New Zealand hoki.
Paulin confirmed the change would mean a bigger range of foreign fish products in New World and Pak’nSave freezers – but he said the sales share would depend on consumer demand. “If consumers say, well actually, we’re not prepared to buy these other products which are supplied, then it may well be that the predominant sales are New Zealand hoki, whether it’s Sealord or Birds Eye.”
At the same time that Foodstuffs bosses David Stewart and Mike Brooker were appearing before a Commerce Commission hearing to offer assurances about their commitment to customers and suppliers yesterday morning, other Foodstuffs managers were ending their video-conference with Sealord executives.
Both Sealord and McCain Foods were diplomatic.
McCain spokesperson Mark Furniss said the company was pleased with its ongoing working relationship with Foodstuffs and the continued ranging of McCain products in stores across New Zealand. “This commitment, and the demand from our customers, will enable us to continue to support New Zealand growers and staff across our New Zealand manufacturing plants.”
It is understood six to eight McCain merchandising staff (responsible for presenting and promoting the company’s products in the supermarkets) are being pulled from the stores, after McCain agreed to pay Foodstuffs staff to do the work. The company hopes to redeploy the staff.
“We will see a shift in the structure of our in-store sales and merchandising teams across the country, and have worked with our current team on the proposed plan,” Furniss said. “We are committed to continue to support these people and those who rely on us right across the supply chain throughout the process.”
“We’ve got merchandisers who have worked for Sealord for 25 years. I’m sad that it will impact our people that we employ, and that we now have to work through a process of, what does that mean for our sales force?”
– Doug Paulin, Sealord
Sealord’s Paulin said the conclusion to talks was not Sealord’s preferred outcome, but he respected Foodstuffs North Island’s decision to commercially negotiate the best offer for its business.
Sealord was not able to meet Foodstuffs’ margin requirements, he said, and so the number of Sealord products in North Island New World and Pak’nSave supermarkets would decrease by around 50 to 70 percent in mid-November.
Of Sealord’s frozen fish range of around 24 products in New World and Pak’nSave supermarkets, most will be deleted entirely. The supermarkets are guaranteeing to stock only four. Up to seven more products may be retained in some stores.
“This has a significant financial impact on the Sealord business, and sadly, we are now reviewing our field sales structure in the North Island,” Paulin said.
“What New Zealanders were buying 12 months ago is different from what they are buying today – and our changing ranges and our supplier partners have to keep up with that. Not only do food tastes constantly change, just like fashion tastes, they also change seasonally and totally depend on people’s lifestyles and budgets.”
– David Stewart, Foodstuffs
Sealord was established on in October 1961, in Nelson, and most of its 1000 New Zealand employees are still based there. He confirmed Sealord had a big merchandising team, who worked part-time around the North Island.
“We’ve got merchandisers who have worked for Sealord for 25 years,”Paulin said. “I’m sad that it will impact our people that we employ, and that we now have to work through a process of, what does that mean for our sales force?”
At the coated fish factory in Nelson, he did not anticipate there would be redundancies, as the company was pursuing other sales opportunities for its frozen fish products overseas. “But we’ll have less overtime, staff will definitely be impacted in terms of the amount of money they’ll earn.”
Paulin would not confirm percentages, but said Sealord had offered Foodstuffs increased margins on all its products. “However when you think about what Foodstuffs are looking at, they want to sell fish at a certain price, they’ve got a certain amount of money they want to make.”
“In this instance, there is an overseas supplier who – either through having better efficiencies than we have, or being willing to take a lower profit margin – they’re able to supply at a price that meets Foodstuffs requirements. And at the end of the day that’s a commercial decision for Foodstuffs, and I don’t bear them in any ill will over that.”
Birds Eye, a subsidiary of Simplot, processes its frozen food products in New South Wales and Tasmania. “They’ve got much bigger plants which are highly automated, and they’ll have much greater efficiencies than what Sealord would have.
Paulin said some of the fish sold by Birds Eye would be Sealord hoki, but the company’s preference was to sell fish under its own label in New Zealand.
Sealord’s full range would continue to be available in Countdown nationally and Foodstuffs South Island stores. “We will let our loyal customers know where they can continue to purchase their favourite New Zealand frozen seafood products on our website by mid-November.”
Foodstuffs North Island confirmed it would be expanding its range of Birds Eye frozen fish products, as a result of its review. The packaging said it was Alaskan pollock or New Zealand hoki, but Foodstuffs says pollock is used only if there is a shortage of hoki.
David Stewart, the general manager of merchandise for Foodstuffs North Island, said the company’s category review programme was a key part of its journey to become one of the most customer driven retailers in the world. “It has been well signalled to all suppliers, the outcomes communicated directly, and the ongoing reviews are discussed at our fortnightly supplier calls attended by hundreds of suppliers each time.”
In total, across Pak’nSave, New World, Four Square and Gilmours, the company had 81,812 different products – and it had introduced 9,014 new products last year.
“We know that top of mind for New Zealanders is value and convenience and we have a responsibility to buy well for Kiwis, the aim of a range review is ensure the range on offer is easy to choose from, is in stock as much as possible and represents what customers need,” he said.
“What New Zealanders were buying 12 months ago is different from what they are buying today – and our changing ranges and our supplier partners have to keep up with that. Not only do food tastes constantly change, just like fashion tastes, they also change seasonally and totally depend on people’s lifestyles and budgets.
“As a 100% Kiwi-owned co-operative, we proudly support local suppliers. For example, in our recent frozen food category review there were 133 successful suppliers in the frozen range review, and 93 percent of the suppliers manufacture in New Zealand, or are New Zealand-owned businesses.”