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Supermarket admission on loss leading

Hon Lianne Dalziel
Labour Spokesperson on Justice
MP for Christchurch East

6 May 2009 Media Statement

Government must respond to supermarket admission of loss leading

Labour’s Justice Spokesperson, Lianne Dalziel, is demanding the National Government take action in light of both supermarket chains admitting that they have been selling liquor below cost which has the effect of enticing people to drink more.

“I am releasing a copy of a letter I have received from Foodstuffs advising the change in Foodstuffs Alcohol Policy.

“That letter states that in line with this new policy they will not be selling alcohol products below cost- a practice known as loss leading – although they still think it is ok when it’s to get rid of obsolete or short dated stock,” Lianne Dalziel said.

“The supermarkets have denied loss-leading in the past, however they have now been confronted with a decision that clearly threatens future licence and renewal applications where there has been loss-leading, so they are running scared.

Lianne Dalziel said the letter referred to the application by the Halswell New World Supermarket operator in Christchurch to open a Foodstuffs’ bottle store “Henrys” next door, despite having a hotel bottle-store metres away on the other side of the car park.

Although the licence was granted, the Liquor Licensing Authority (LLA) used the decision to state that the practice of ‘loss leading’ (selling below cost) would be treated as evidence of lack of suitability to be granted a licence.

In its decision Judge Unwin of the LLA stated that ‘Most licensees understand that they are dealing with a drug, and that they have a duty under the Act to help promote the reduction of liquor abuse. In our experience loss leading helps to promote the abuse of liquor’.

“The very object of the Sale of Liquor Act is undermined by loss-leading and it is time it was prohibited," said Lianne Dalziel.

“I have asked that the select committee ask the supermarkets what proportion of their turnover is alcohol based and how that has tracked over the years since they were given the ability to sell wine in 1989 and beer in 1999. I have also asked them to find out what arrangements exist that enables them to discount at the level they do, including rebates.

““The community is demanding Government act to reduce harm caused by liquor, and I urge National to take note and take action,” Lianne Dalziel said.



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