The Long Drift — Part 2: The Brand That Ate Its Suppliers

The sourcing decisions behind New Zealand's most trusted grocery brand, and what they've cost

In the first piece in this series, I traced three founding stories — Wattie's, Foodstuffs, Pams — each one built on the same instinct: don't be dependent on someone else's commercial logic. Process it here. Source it here. Build something that serves the community it came from.

This piece is about what happened next.

The most trusted brand in New Zealand

For years, Wattie's topped the Reader's Digest Most Trusted Brand survey in its categories. The red and gold label was as close to a household certainty as NZ food had — the brand on the beans, the tomato sauce, the frozen mixed vegetables that generations of parents had shaken into dinner without thinking about it. Trust accumulated over decades. The kind that doesn't need advertising.

Pams was something different — not a manufacturer but a retailer's own label, spanning every aisle. But in volume terms it became the most bought grocery brand in New Zealand. Not the most loved, perhaps. But the most present. The small red square on thousands of products that shoppers reached for because the price was right and the name was familiar.

Both earned their familiarity honestly. Over time. Through consistency. By being reliably there.

That accumulated trust is now being spent. Not by accident. By a set of purchasing decisions, made in ranging reviews and tender processes, that have used the brand equity built over decades as cover for a fundamentally different sourcing model.

What happened in 2021

In October 2021, Sealord chief executive Doug Paulin gathered his sales team on a Friday afternoon to tell them the news. Talks with Foodstuffs North Island had concluded. The outcome was a reduction in Sealord's frozen range across New World and Pak'nSave of somewhere between 50 and 70 percent. Of around 24 Sealord products in those freezers, most would be deleted entirely. The supermarkets were guaranteeing to stock four.

Paulin told me later the sales and merchandising team were gutted. He said managers were sad.

Sealord had offered to increase Foodstuffs' margin by 50 percent. It wasn't enough.

Wattie's and McCain were hit in the same review. New World, Pak'nSave and Four Square cut back their frozen ranges across Wattie's vegetables, chips and hash browns, replacing shelf space with Pams and Value products. Heinz Wattie's chair Mike Pretty declined to comment publicly. The company restructured staff. McCain pulled merchandising staff from the stores.

Three of New Zealand's most significant food manufacturers — companies with NZ growing contracts, NZ processing facilities, NZ workers — were reduced or deleted from the shelves of the country's dominant grocery chain in a single ranging review. The shelf space went to house brands.

The Grocery Supply Code that was supposed to prevent exactly this kind of arbitrary delisting from a supplier with no power to refuse? It came into force in 2024. Three years after the review that started the wound. For Wattie's, McCain and Sealord, it was too little too late.

Where Pams actually comes from

Pams claims 68% of its products are locally sourced. The figure appears on the brand's sourcing page. It is a portfolio average — calculated across the full range, from fresh produce and dairy to packaged goods and household products. It is not broken down by category.

The categories where it falls short are not incidental. They are the backbone of what NZ food manufacturing was built on.

Canned peaches: South Africa and China. Beetroot: China. Corn: Thailand. Tomatoes: Italy. These are the categories where NZ processors — Wattie's specifically — spent decades building the infrastructure to grow, harvest, and can the product domestically. The 32% of Pams products that aren't locally sourced isn't distributed evenly across categories that don't matter. It is concentrated precisely in the categories where the domestic processing chain existed, was viable, and has now been systematically undercut.

The 68% average is doing significant statistical work. A high local-sourcing rate on fresh produce, dairy and meat carries the portfolio number while the processed categories go offshore, one tender at a time.

Foodstuffs' public position is consistent: the company sources locally wherever possible, but international supply helps keep prices affordable. What they don't say is that "wherever possible" is defined by a tender process in which the cheapest compliant supplier wins the contract. There is no structural preference for NZ supply. There is a stated aspiration, periodically reviewed against the offshore alternative, with the outcome determined by price.

The Sealord detail that tells the whole story

When Foodstuffs deleted most of Sealord's range in 2021, it simultaneously held Sealord up on the "support our locals" page of the New World website. Established 1961. Half-owned by iwi.

Foodstuffs also, at around that time, owned its own fishing company — Leigh Fisheries and the Lee Fish brand, acquired two years prior. The same ranging review that decimated Sealord's shelf presence made more room for Alaskan pollock and Australian-processed hoki.

This is the private label dynamic operating in full view. The retailer with 45% of the grocery market delists an NZ supplier, replaces its shelf space with lower-margin imports and its own house brand, and continues to reference that supplier in its local sourcing marketing. The marketing and the merchandising operate in different departments, apparently without comparing notes.

The Food and Grocery Council's Katherine Rich called it the best example in 20 years of the detrimental impact of the duopoly. She said the word decimate deliberately.

The butter on the shelf this week

This week, a product called Burtfield's & Co appeared in Pak'nSave stores around the country. It comes in a 500-gram block, wrapped in familiar yellow paper. It sits in the butter section next to NZ-made product. It undercuts that product on price.

It is American butter. Imported in bulk by Dairyworks, a Synlait-owned company, and repackaged at their Christchurch site. Country of origin is on the back label, in small print.

Some shoppers have opened it at home and found white butter where they expected yellow — grain-fed American cows rather than NZ's grass-fed herds produce a paler product. The colour difference is the only visible signal that something is different from what they've always bought.

Dairyworks' explanation is straightforward: US butter prices fell low enough to offset 12,000 kilometres of freight and still undercut locally-made product. A window opened. They took it.

NZ butter, the Dairyworks spokesperson noted, is a premium global product. Most of what's produced here is exported. Local retail prices are set by global market rates, not by what it costs to produce butter in a paddock in the Waikato. So a NZ consumer paying $7.29 for a block of home-brand NZ butter is paying a global export price for something produced forty minutes from their house, while an importer can find it commercially viable to ship American butter halfway around the world and sell it for less.

This is not a Pams product. Foodstuffs is not the importer. But Pak'nSave is a Foodstuffs banner store, and the logic that put American butter on that shelf in yellow paper is the same logic that put South African peaches in a Pams tin and Alaskan pollock in the freezer where Sealord used to be. When price is the dominant organising principle of a grocery system, and that system is controlled by two companies with 90% of the market, this is what the environment produces. Suppliers — domestic and foreign — respond to the incentives the system creates. The incentive is: be cheaper.

What the closures actually represent

In March 2026, Heinz Wattie's announced the closure of factories in Christchurch, Dunedin and Auckland, and frozen packing lines at the Hastings plant. Around 350 roles. McCain's Hastings plant to follow by January 2027. Around 220 Canterbury vegetable growers affected. Around 100 Hawke's Bay growers who had supplied Wattie's with peaches — some for two generations — holding contracts that are now being wound down.

Foodstuffs' response, when pressed, was to point out that most frozen vegetables sold in its stores are still NZ-grown. That Wattie's and McCain cited rising energy and production costs as the driver for their decisions. That the company's priority is customer value.

All of these things are true and none of them are complete.

Energy costs rose. Production costs rose. Consumer spending on frozen vegetables has shifted. These are real pressures. But the 2021 ranging review — which replaced NZ manufacturer shelf space with cheaper Pams and Value alternatives three years before the factory closures were announced — was also real. The wound and the closing are not coincidental. They are sequential.

Wattie's managing director Andrew Donegan said the commercial sites were simply not sustainable. He said numerous alternatives had been explored. He said the decision was not taken lightly. He said the company had regular discussions with government departments, who were aware of the challenges facing the industry.

He did not say: and the NZ supermarket that holds 45% of the grocery market replaced our products with cheaper imports in 2021, and we have been bleeding since.

The co-op that answers to its members

Foodstuffs will always have an answer. It is locally owned. It is a co-operative. Its profits stay in New Zealand. It is not a foreign multinational extracting returns to offshore shareholders.

These things are structurally true. What they obscure is who the co-op actually serves.

The co-operative structure distributes returns to member-operators — the store owners of Pak'nSave, New World, Four Square. When Foodstuffs North Island extracted $24.8 million in supplier repatriate rebates in a single financial year, that money returned to member-operators. When a ranging review cut Wattie's shelf space and replaced it with cheaper-sourced Pams, the margin improvement returned to member-operators. When American butter undercuts NZ butter in a Pak'nSave, the commercial logic that permitted that outcome is the same logic that governs every shelf decision in that store.

The co-op was founded to protect independent grocers from chain store power. It now exercises that power on the NZ food manufacturers that supply it, with the same ultimatum the original chain stores used against the independent grocers: our terms, or you're out.

Heaton Barker would recognise the mechanism. He built it.

What 88 years of brand equity pays for

In 1937, Pams was born because a supplier tried to discipline Foodstuffs through withdrawal of supply. The co-operative's response was to build its own brand rather than comply — an act of self-determination that created something genuinely useful. A NZ house brand, sourced locally, priced accessibly, trusted over time.

That trust is real. It was earned. Eighty-eight years of being reliably on the shelf, reliably priced, reliably familiar — that is worth something. It is worth the benefit of the doubt when a product changes. It is worth a shopper not reading the back label. It is worth the assumption, reasonable given the history, that Pams is still fundamentally the same thing it was.

It is not the same thing it was. The label is the same. The sourcing logic behind it has changed. The canned peaches come from the other side of the world. The frozen vegetables that replaced Wattie's on the shelf are sourced from wherever the tender determined. And the brand equity accumulated over 88 years — the trust, the familiarity, the assumption of NZ origin — provides the cover that makes the transition invisible to most shoppers.

That is what brand equity is worth to a retailer operating in a market with no meaningful competition. It is worth not having to explain the change. It is worth a customer reaching for the familiar red square without asking where the contents come from.

It is worth, in the end, the 32 percent.

This piece is part of The Long Drift, a four-part series examining NZ's food system and the trajectory it's on. Part 1 — What They Were Built For — is [here]. Related OFT reporting: When NZ Stopped Canning Its Own Peaches, The Quiet Collapse Behind New Zealand's Frozen Vegetables, You Wouldn't Buy Your Dinner From Temu, The Wattie's Closures Reveal a Hidden Link Between Your KiwiSaver and Your Food.

Part 3: Nobody Taught Them — next.