Heinz Wattie’s will close four New Zealand manufacturing plants this year with the loss of 300 to 350 jobs. The Press has reported the company’s revenue was essentially flat for nearly a decade as costs continued to rise. The union described multinationals as “making a choice to walk away”. The Green Party has called for a parliamentary inquiry.
Wattie’s workers caught up in the four plant closures can read our guide to your rights when your employer makes you redundant in New Zealand.
Much of the public response has landed on supermarkets, and on Foodstuffs’ 2021 decision to replace Wattie’s frozen range in New World, Pak’nSave and Four Square stores with its Pams and Value house brands. The prevailing account is that multinationals are squeezing workers while supermarkets squeeze suppliers.
Stats NZ’s Producers Price Index tells a different story. The PPI tracks what each industry pays for its inputs and charges for its outputs, making it a reasonable gauge of margin change at the industry level. Over the two years to December 2025, every link in New Zealand’s food chain gained margin — with one exception.
Food manufacturers gained margin
| Link in the food chain | Output prices | Input prices | Margin change |
|---|---|---|---|
| Dairy farmers | +16.8% | +8.0% | +8.2% |
| Dairy product manufacturing (Fonterra et al.) | +19.4% | +14.0% | +4.7% |
| Fruit, oil, cereal and other food manufacturing (Wattie’s, McCain) | +12.1% | +5.3% | +6.4% |
| Beverage and tobacco manufacturing | +6.1% | +4.3% | +1.7% |
| Horticulture and fruit growing | +5.9% | +6.2% | −0.3% |
| Supermarket, grocery and specialised food retailing | +6.5% | +5.1% | +1.3% |
| Meat and meat product manufacturing | +9.6% | +35.9% | −19.3% |
The industry category that contains Wattie’s and McCain — fruit, oil, cereal and other food manufacturing — saw its margin widen by 6.4 percent. Output prices rose more than twice as fast as input prices. That is not the profile of an industry under margin pressure.
A volume problem, not a margin problem
Donegan’s own language points at the issue. Revenue had been “flat for nearly a decade while costs rose steadily”. With output prices up more than 12 percent in two years, flat revenue means volumes have fallen. Wattie’s is selling less product.
That is consistent with the 2021 Foodstuffs de-listing, which moved Wattie’s frozen range off more than 200 North Island supermarket shelves in favour of Pams and Value. A food manufacturer’s fixed costs — plant depreciation, maintenance, minimum staffing — are substantial. Once volumes fall below a certain level, individual factories can become uneconomic even while the industry as a whole still earns margin. That matches the announcement: four plants closing, not the company.
In short, Wattie’s can still sell what it makes at a profitable unit price. It cannot sell enough of it, because the shelf space has gone to retailers’ own brands.
The real squeeze is on meat processors
AFFCO, Silver Fern Farms and their peers saw the prices they pay farmers rise 35.9 percent over two years. They were able to pass on only 9.6 percent to their customers. The resulting margin compression — around 19 percent — is the largest in the food chain.
Farmers benefited. Sheep, beef and grain producers’ output prices rose 46 percent over the same period on higher global protein prices. Meat processors absorbed the gap between what they paid and what they could charge. If there is a food-chain margin crisis in New Zealand, it sits in meat processing rather than prepared foods.
Supermarkets did not take the margin
The PPI does not support a version of events in which supermarkets have captured a large share of food-chain margin over the past two years. Retail grocery margins rose 1.3 percent — the smallest gain of any profitable link. What supermarkets paid wholesalers moved in near-lockstep with what they charged consumers.
What supermarkets have changed is which supplier captures the margin on any given sale. A Pams-branded product carries the retailer’s margin end-to-end, rather than being shared with an international supplier. For a displaced supplier like Wattie’s, the effect is similar to a price squeeze, but it is not one.
Where the money has gone
If producers, processors and retailers all held or expanded margin, and consumer prices rose sharply, the money has come from consumers. New Zealand’s Consumer Price Index sub-groups over 20 years show the pattern.
| CPI group | Index 2005 | Index 2025 | 20-year change |
|---|---|---|---|
| All groups (headline CPI) | 100 | 166 | +66% |
| Food | 100 | 180 | +80% |
| Housing and household utilities | 100 | 215 | +115% |
| Transport | 100 | 148 | +48% |
| Within food: fruit and vegetables | 100 | 195 | +95% |
| Within food: meat, poultry, fish | 100 | 174 | +74% |
| Within food: restaurant meals, ready-to-eat | 100 | 195 | +95% |
| Within food: grocery food | 100 | 171 | +71% |
Food has outpaced the headline CPI by nearly 14 percentage points over 20 years. Housing has outpaced it by 49. Fruit and vegetables have almost doubled.
In the shorter window where PPI data can trace the chain end to end — December 2020 to December 2025 — retail grocery food prices rose 30 percent. Global dairy export prices rose 22 percent. Meat export prices rose 2 percent. The gap accumulated at the consumer end.
Domestic food manufacturing is shrinking per head
The Wattie’s closures fit a longer trend. New Zealand’s food manufacturing output per capita has fallen 14 percent since 2005, according to Stats NZ GDP-by-industry and population figures.
| Year | Food manufacturing real output (2005 = 100) | Population (millions) | Per-capita index |
|---|---|---|---|
| 2005 | 100 | 4.13 | 100 |
| 2015 | 100 | 4.61 | 89 |
| 2020 | 106 | 5.07 | 86 |
| 2024 | 110 | 5.29 | 86 |
Absolute food manufacturing output is 10 percent larger than it was 20 years ago, largely on the strength of dairy processing for export. But population has grown 28 percent over the same period. On a per-head basis, New Zealand processes less of its own food than it did before the global financial crisis.
Imports are filling the gap. David Hadfield of Process Vegetables NZ has told media that frozen vegetables are increasingly sourced from China, South Africa, Thailand and Italy. Every plant closure reduces domestic processing capacity, and capacity does not return quickly once lost.
Ownership structures matter
Heinz Wattie’s is owned by Kraft Heinz, a United States multinational. McCain Foods is a Canadian family company. Fonterra is a New Zealand farmer cooperative. Foodstuffs is a federation of New Zealand owner-operator cooperatives. Woolworths NZ is an Australian subsidiary.
None of these structures is inherently good or bad, but they weigh different things when a decision is difficult. Kraft Heinz tests each plant against a global cost of capital. If a Christchurch factory no longer meets that test, it closes and capital is reallocated elsewhere. A New Zealand retail cooperative tests each product against margin per shelf metre. If a house brand performs better, a national supplier loses shelf space. Each decision is rational on its own terms. The collective outcome is not weighed by any individual decision-maker.
What the data settles, and what it does not
The PPI supports four specific conclusions.
- Wattie’s is not being squeezed on margin. Food manufacturing margin is up over the two-year window, not down.
- Supermarkets have not captured a large share of total food-chain margin over the same window. Retail margins rose only slightly.
- Consumers have paid more than general inflation for food, and much more for housing. Retail food prices have run nearly 14 percentage points ahead of headline CPI since 2005.
- Meat processors have been genuinely squeezed. Their margin has collapsed as farm-gate livestock prices rose faster than what processors could charge downstream.
The data does not settle Wattie’s firm-specific profitability. Industry averages can hide firms with older plants, higher fixed costs or branded premiums that no longer justify themselves. It does not distinguish between genuine cost pass-through to consumers and collective margin expansion by processors and retailers. And it cannot establish what Wattie’s revenue would have done if Foodstuffs had kept the frozen range on shelves in 2021.
Methods
Margin change is the percentage-point difference between output and input price index changes over the same window. PPI figures are from Stats NZ Producers Price Index, December 2025 release, Tables 1.01 (output prices) and 2.01 (input prices). CPI sub-group figures are from the Stats NZ Consumers Price Index quarterly series. Food manufacturing output and population figures are from Stats NZ GDP-by-industry and population estimates.
Your turn
Do these margin and price-index numbers match what you are seeing on the ground — as a grower, a supplier, a retail worker or a shopper? Add your view in the comments.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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