Hubbard Foods Apologises To Foodstuffs

Media Statement
October 19, 2004

Hubbard Foods Apologises To Foodstuffs For Error In Trade Terms Treatment

Hubbard Foods has apologised to the Foodstuffs Group and its members for having trade terms that were different over a defined period from those provided to a major competitor which it also supplies.

The Company’s Managing Director, Dick Hubbard, and management have accepted total responsibility for the error, and have accepted the negotiated sanctions imposed by Foodstuffs as fair, but tough.

The Chairman of Hubbard Foods, David Irving, said it was a fundamental behaviour of suppliers to New Zealand supermarkets that underlying, permanent trade terms were even-handed between the two major groups.

Terms of trade for supermarket suppliers are reasonably complex and take account of most aspects of post-production customer delivery, including product volumes, order mix, delivery locations, freight rates and payment terms. Deductions and allowance can be made for each of these items.

“Unfortunately the Company got itself into a situation where trade terms were not neutral. This occurred because Company management had not considered any differences in terms of trade to be significant or prejudicial to Foodstuffs. Hubbards now accepts this was a wrong interpretation, but it was not a deliberate attempt to take advantage of the Foodstuffs Group.”

There is no evidence that customers of supermarkets within the Foodstuffs Group, who purchased Hubbard’s products, were disadvantaged by the Company’s error.

Mr Irving said that commercial issues, such as terms of trade, were generally dealt with privately. He had taken the unprecedented step of making a formal statement because of the prominence recently given to matters concerning Hubbard Foods, and in the interests of clarity.

“Hubbards is a good company. Locally owned and operated, it has a history of innovation, and has performed strongly between its two multi-national rivals, Sanitarium and Kelloggs in the New Zealand marketplace. I believe the Company can emerge from this incident with even stronger trade relationships as a result of the discipline imposed by the development and implementation of new terms of trade.”

Mr Irving said similar action has been taken previously against other supermarket suppliers, so grocery manufacturers were well aware of the seriousness of the issue.

“It was important that the company addressed this issue as quickly as possible, and given my previous grocery industry experience I took personal responsibility for meeting with Foodstuffs CEOs and agreeing the settlement.

“The company is pleased this issue is behind it. Hubbards can focus on the future.”

ENDS