The Commerce Commission said it is not satisfied a bid by the Seventh Day Adventist Church to take over a tofu company won’t give it market dominance.

Life Health Foods, a registered charity owned by the Seventh Day Adventists’ charity is currently trying to buy privately held Chalmers Organics, the makers of Tonzu.

The Chalmers family have been making tofu commercially since the 1980s – the company’s directors are Stephen and Lippy Chalmers, and their children, Stephen and Jesse Chalmers.

The Chalmers sold their first tofu company Harvest Soy Foods to Paul Johnson who renamed the company Bean Supreme.

Johnson sold Bean Supreme to the Seventh Day Adventist Church’s Life Health Foods in 2006.

Now the church, which also owns Sanitarium in New Zealand, wants to buy the Chalmers’ latest effort, Tonzu.

But the Commerce Commission is unhappy because the merger of Bean Supreme and Chalmers Organics will combine the top two supermarket suppliers of tofu.

Tofu ownership

The merger application suggests Tonzu – which employs 30 staff – would continue processing its tofu from its own facility in Auckland. Life Health Foods has about 150 staff operating out of Auckland’s Avondale.

But last week the regulator said there are many other tofu players, but the acquisition of Tonzu by Life Health Foods could lead to “unilateral effects in relation to a national market for the supply of tofu to the major grocery retailers”.

The Commerce Commission said it wasn’t satisfied there were enough competitive restraints in the big supermarkets, even though both Countdown and New World owner Foodstuffs produce their own tofu.

Life Health Foods said that wasn’t fair because there was a lot of competition for tofu from Asian supermarkets and specialty stores.

But the regulator said smaller tofu companies wouldn’t be able to dominate the big supermarkets because of how demanding they are in terms of marketing support, supply and so forth.

“Feedback from smaller tofu suppliers and the major grocery retailers indicates that the requirements to supply Asian supermarket or other foodservice customers do appear to be different than for the major grocery retailers,” the commission's documents say.  

Tofu wars

Background to the tofu market in NZ is set out in LHF’s submissions to the regulator.

It points out that in January 2019 Countdown introduced Macro tofu products and “quickly took market share from the parties, initially through lower pricing”.

LHF also point out that while rival brands Hing's and Check aren’t in as many stores as Tonzu, a “confidential Tofu Ranking Report” for Pak’nSave stores in the North Island showed it dominated that market.

It also said that Hing’s and Check tofu could easily expand.

However, the regulator said its discussions with tofu operators say expansion is difficult. The commission has asked for submissions from the companies and any other interested parties by May 17 and said it would make a decision by May 31.
Business of vegetarian food 

LHF solely produces and distributes vegetarian food. Adventists focus on a simple diet that is mainly plant-based.

The organisation also owns Kato sauces, Lisa’s hummus and dips and Naked Soups, supplies restaurants under the brands' Prep Kitchen and Food by Chefs, and distributes Sanitarium Australia’s Vegie Delights and Alternative Meat Co brands.

The registered charity does not file separate accounts, but its parent posted a loss of $2.86m from revenue of $187.47m in the 12 months to June 2021. As a charity, it does not pay company taxes.

Coriolis research based on 2018 figures ranked Sanitarium as the 14th biggest processed food firm in NZ, behind giants such as Kraft Heinz and Goodman Fielder. This figure is understood to include LHF. 

However, while it has the same owners, LHF said it doesn’t have crossover with Sanitarium in trading relationships with retailers.
LHF's executive general manager, Bennie Hendricks, said he could not comment while the proposal was before the Commerce Commission.