We recently held our Supplier Update, accompanied by our Gala Dinner and trade expo. These events are the most important events in the Countdown calendar. The purpose of these events is to share with our suppliers the wider direction of our business, and respond to questions.
I want Countdown and our suppliers to win together. To do this, it’s important we understand each other, share objectives and collaborate as closely as possible. At the Gala Dinner, we got the opportunity to recognise those Countdown suppliers who have relentlessly pursued shared success over the last year. I want to thank everyone who attended and congratulate all the winners as well as recognising our own award-winning team members.
At Countdown, wherever possible, we want to deal directly with our supplier community so that we can share data, address problems directly and negotiate honestly. I am committed that these discussions will always be done fairly, transparently and based on data. Chris Fisher and his team are bringing more and more insights and structure to our merchandising decisions, for the benefit of both your business and ours. A great example of this is our new segmentation programme which launched in our Ponsonby store. We have more than 2500 new skus in store and sales indicate that a number of products have done extremely well with customers in this neighbourhood.
Speaking of shared activity with suppliers, we were pleased to launch the Countdown Egg Producer Programme for free range and barn eggs. There has been some discussion about whether supermarkets should move to sell free range eggs only in New Zealand. There are some real challenges with that. Firstly, customers tell us that affordability is an important criteria and many demand a choice of eggs. The second challenge is supply. Currently, just 18 per cent of eggs produced in New Zealand are free range.
The purpose of the Egg Producer Programme is to put in place plans with farmers to increase the availability of the free range and barn eggs over time. Long-time Countdown free range and barn egg farmers, Otaika Valley, Wholesome NZ and Frenz, all joined the programme and we welcome them on board.
This is a great example of how Countdown can partner directly with our suppliers to serve customers, meet a challenge and grow our businesses together.
We are doing similar things with our farmers, particularly primary produce suppliers. Steve Sexton, Merchandise Manager for Produce, has been building direct relationships with New Zealand fruit and vegetable suppliers across the country.
We anticipate that, within the next three years, we will return an estimated $20 million per year in margin back to our farmers that we have a direct relationship with. This will enable these suppliers to be more profitable and give them the ability to invest in their own businesses so they can continue to deliver the freshness and quality that our customers demand.
Some great examples of these successful direct relationships are Hinton’s, HR Horticulture and Leaderbrand. These three businesses vary greatly in size but demonstrate that we can build direct relationships no matter the scale.
Establishing more direct relationships with suppliers means that we can continue to understand one another's business, including seeing bigger opportunities and facing challenges head-on. We believe that with a direct relationship we can minimise food waste by making use of the entire crop. This means that farmers can provide us surety of supply, while we can guarantee a retail channel.
Countdown’s produce sales are increasing, and I put a lot of this down to having fresher and better quality products from our direct producer relationships.