An online grocery business Supie went out of business on Monday morning after being placed in voluntary administration by its owner.

The Auckland-based independent virtual supermarket launched 2.5 years ago in a bid to bring more competition to a market dominated by two big players, but struggled to achieve the scale necessary to be competitive and profitable.

Supie group director Sarah Balle made the call to place the company into administration after a key investor pulled the pin on further funding, leaving the business with about $3 million in debt.

PWC voluntary administrator Richard Nacey said the company, which employed 120 people, had run out of cash, and it was too soon to say whether it owed money to staff.

“While it’s had reasonably substantial growth over the last 12 months, that growth has almost flat-lined over the last couple of months and it has just not reached the scale that it needs to operate profitably,” Nacey said.

Nacey told Checkpoint it was early days in the process, and the administrators had just begun getting their heads around the variables involved, starting today.

But at first glance it looked like there were about 400 creditors, he said.

“We don’t have the funds available to continue to trade, so we’ve made the vast majority of staff redundant today.

“I think there’s the reasonable chance that there won’t be the funds available to pay them.”

However he hoped the administrators would have a final answer that next week.

Customers who were members of the store’s Christmas Club would also have to wait for answers about what would happen to that.

Supie founder Sarah Balle was the sole director by the time the company went into administration, Nacey said: “My understanding is that the other directors resigned last week.” Though he was not sure why.

And he understood a backer had pulled out.

“That person or group has been supporting the company for a period of time, and last week decided they weren’t in the position to continue to support it.”

“It’s a reasonably expensive outfit to run, being in the start-up phase. So I think a lot of the funding that it received when into just the operational expenses of running the business.

“There’s not a lot of fixed assets around, they haven’t been spending money on things like a number of vehicles or property. It’s all gone into working capital and looking to operate the business.

“We’re not sure what the causes of insolvency were at this stage.

“Unfortunately it never reached the scale it needed to be, to be competitive with other entities in the industry.”

“My understanding is that based on the current monthly revenue it was actually up to around $14m [turnover] a year.

Tough terrain for newcomers entering grocery retail

On Monday the Supie website was down, saying it was undergoing maintenance

Earlier this year, the company said it was under pressure from suppliers to raise its prices.

Grocery Commissioner Pierre van Heerden said he was disappointed that Supie did not succeed in the country’s supermarket sector.

He wants to tackle the barriers for new competitors to enter and expand in the market.

“It is disappointing to see any new entrant or competitor coming into the market not succeeding. I’m here to try and level the playing field to make sure that others that come into the market, and other smaller ones that are growing, actually have a chance of competing.”

The watchdog had been in his new role for just over 100 days and today released a three point fix-it list for the grocery sector.

He said he also wanted to ensure prices were accurate and that food suppliers supported new entrants into the sector.

“We want to create an environment where new entrants are willing to invest in the market and be a competitive force against the supermarkets that are currently there”.

Van Heerden said this was a once in a generation opportunity to give consumers better choices, innovation and prices.

Supie ex-employees ‘devastated’

A former Supie employee said the company going into voluntary administration had left workers heartbroken.

Anthony Bunce was the assistant manager in the chilled and frozen department and said ex-employees were in a devastating situation.

He said they were told they would not be paid for the last two weeks, nor would they receive a pay-out for their annual leave, something they were desperate to have.

“[I’m] devastated for my friends, Christmas is coming, there’s rent to pay, everybody’s devastated,” he said.

“There was a lot of tears, a lot of hugging, a lot of crying.

“We’ve got bills to pay, I know these guys, my friends behind me here, are going to struggle, it’s not easy to just find a job in a day,” he said.

Another worker, Faith, said the company needed to “run it up” and pay former employees what they were owed.

“Living costs have gone up, everything, rent, we need our pay,” she said.

“Do what you’ve got to do, and pay us.”

Faith said she was stressed, and angry after finding out she no longer had a job.

Suppliers will also feel the pinch

Simon Eriksen of Neat Meat, which supplied the Harmony line of meat products to Supie, said he first heard the retailer was out of business via media early on Monday, before receiving an official notice later in the morning.

Neat Meat was owed about $14,000 by Supie, he said.

“It’s pretty gutting really. We’ve got to sell a lot of meat to get $14,000 back.”

And he said he did not rate the company’s chances of seeing that again.

However, Neat Meat had “put an arm out” to some former Supie staff, and “may be looking for some more staff” themselves, Eriksen said.