This was a milestone year for our co-op and its future, one in which we looked to open a new chapter in our proud history, by announcing a proposed merger with Foodstuffs South Island.

Previous mergers have helped make us more resilient, more efficient, and in a better position to invest in innovation, customer experiences and value. The Foodstuffs North Island merger that brought the Auckland and Wellington co-ops together 11 years ago has been an incredible success and is a benchmark for our next step.

Our merger proposal is supported by a solid business case, so it had the support of all our Grocer and Independent Directors on both sides of the Cook Strait. It was therefore heartening to see Members show their overwhelming support for it too, when they voted on it at the start of June.

At the time of writing, we’re still working through the regulatory clearance process with the Commerce Commission, but all going well, by this time next year we’ll be well down the road of merging into one national co-op that’s more efficient and therefore able to deliver better value and innovation for customers.

FY24 also provided some respite for our co-op after the pandemic and extreme weather events of the previous years, but we continued to work hard to keep prices down for our customers, take steps to make our stores safer, and serve our local communities throughout the North Island.

At the start of the financial year, food price inflation was still in double digits due to supplier cost increases and the devastating impact of the previous summer’s cyclones on the nation’s annual produce harvest.

Our response was a laser focus on keeping prices as low as possible, especially for the foods that matter most to customers, and the result was a rate of price increases in our stores that was below the official rate for most of FY24 – which shows we’ve done a lot of heavy lifting.

With food price inflation under 1% p.a. at the time of writing, it seems to me it’s been tamed, for now, and I believe we can be proud of the role we’ve played in achieving that.

A determination to serve our local communities is a commitment Members make when they join our co-op. This comes in many forms including donations to community food providers, such as our Social Supermarket partners, food banks and food rescue organisations, as well as support for local schools, sports teams and community groups, totalling $7 million from our Members in FY24.

This was also the first year we worked with the new laws and regulations put in place under the Grocery Industry Competition Act, Unit Pricing for Grocery Products Regulations, and the Grocery Supply Code. We’ve embraced this new suite of regulation and continue to work hard to implement it across our co-op and with our supplier partners.

We’ve also welcomed the extra competition that comes from allowing external retailers to access the scale and efficiency of our co-op’s wholesale supply infrastructure.

Our brands are a much-loved part of New Zealanders’ lives, and our multi-brand model is a key strength of the co-op. Our stores and Support Centre teams continued to work incredibly hard to ensure these delivered strongly for our customers and communities in FY24. It’s always a big moment in our co-op when a new store opens, and in FY24 we were proud to roll out a further six Four Square new format stores, a brand new PAK’nSAVE for Warkworth, and Gilmours’ first new site in eight years, to service Hawke’s Bay.

The year saw some outstanding brand campaigns too, with New World’s ‘Find your wonderful’ showing how they offer so much more than food, Four Square’s long-awaited return to TV with their ‘King’s Feast’ campaign, and Pams as ‘the most popular grocery brand in the land’. Not to mention PAK’nSAVE being named ‘most trusted supermarket’ yet again!

Financial highlights

The FSNI Board is pleased to report a year of strong financial performance that ensures the co-op is well-placed to keep supporting its Members and stores so they can serve their local communities.

FSNI’s consolidated FY24 statements (included at the end of this report) cover the perimeter of the Foodstuffs North Island Group only – not the financial results of our Member stores – and the results represent trading for 52 weeks, compared to 52 weeks in the prior year.

In FY24, combined Member store revenue was $10.8b – up $942m (9.6%).

FSNI’s statutory revenue, which reflects gross Member purchases directly from FSNI Distribution Centres and net Member charge through purchases, was $9.2b – up $773m (9.1%).

EBIT for FY24 was $292m – up $23m (8.4%) – made up of the following components:

• Deferred Rebate Voucher (DRV) Member funding of $138m – up $12m
• Supplier Repatriate Rebates for FY23 of $25m – up $0.2m
• Group Project Levy Member funding of $27m – down $6m
• Property & Investment portfolio EBIT of $116m – up $17m

The Board is pleased to announce for FY24 the distribution to Members of the DRV and Supplier Repatriate Rebates totalling $163m.

The Group Project Levy Member funding and Property & Investment profit are retained by FSNI to enable the co-op to continue to invest in IT, digital and property assets.

In this fiscal year, the overall capital expenditure amounted to $254 million – up $82m or 47%.

Looking ahead

As we look ahead to the next 12 months, we have three clear priorities: our people, talent and culture, winning customers every day, and delivering the merger benefits.

If the Commerce Commission clears our merger proposal by 1 October 2024, FY25 will see the start of a carefully planned transition to bring the two co-ops together, and the first steps towards our ambitious goal to be the best grocery co-op in the world. The merger is grounded in the principle that we will take the best of the best from each co-op to form the new national co-op, and we’re committed to listening and learning from each other to achieve this if the proposed merger goes ahead.

We’ve always been a people business, and always will be. Our people are what makes the difference to our performance and strategy, and as we look to start a new chapter, how we grow and develop our people and future Owner Operators will be more important than ever. We have our sights set on being New Zealand’s employer of choice, with the best opportunities, and it will be exciting seeing this continue to come to life in the year ahead.

We have continued to make progress on our aspiration to become the most customer driven retailer in the world. In the year ahead we need to continue to stay focused on delivering on our customer promises in every store, day in and day out, and building customer loyalty. We will also continue to invest in the capabilities and infrastructure that improve the experience and value for customers, such as our focus on e-commerce, improving our loyalty offer, and investing in new stores.

Earning our social licence to operate is an absolute priority and we know we have to work hard to deliver on our social promises in every community we are part of. We are New Zealanders, here for New Zealanders.

Thank you

I want to thank Chris Quin and the whole FSNI Leadership Team for their hard work and dedication to leading our co-op through another successful year. You’ve kept us firmly focused on delivering on our customer driven strategy, being a positive force for New Zealand, and ensuring our co-op strongly plays its part to fight food price inflation. All of this while navigating our proposed merger and leading our Support Centre teams.

To the leaders in our Banner Representation Groups (BRGs), thank you for your commitment to making our brands stronger. You put a lot of time and passion into your role on the BRG, and the success of all our brands is a real credit to you and your strong partnership with our Support Centre teams.

Finally, thank you to our Members for the hard work you put into your stores, leading your incredible store teams to live our customer promises, and for everything you do day in and day out to support our co-op’s success.

On behalf of the Board,

Dean Waddell

Chair