Sanitarium backtracks on decision to cut-off The Warehouse's Weet-Bix supply

Leading food company Sanitarium has backtracked on its decision to cut off Weet-Bix from The Warehouse, saying it's reinstated the supply of the popular breakfast cereal.

The Warehouse was fuming amid revelations last week Sanitarium made the call to stop supplying it with the affordable breakfast staple.

Sanitarium was, however, still supplying the cereal to the supermarket duopoly of Woolworths NZ and Foodstuffs.

It was a situation the Commerce Commission described as "extremely concerning".

But on Tuesday morning, Sanitarium confirmed it would reinstate The Warehouse's supply.

"To supply the retailer, the company has decided to reduce allocation into export markets to release the capacity to supply Weet-Bix to The Warehouse."

Sanitarium also confirmed it received a letter from the Commerce Comission on Friday. However, Sanitarium's view "is clear that no breach of the Commerce Act has occurred", Sanitarium general manager Michael Barton said.

"We apologise for any concern created for our loyal consumers," he said in a statement.

"The demand from all our markets, including the Pacific and Asian markets, has risen in the last couple of years exceeding supply capabilities and resulting in supply constraints."

Barton said Sanitarium had been trying to prioritise the allocation of the product.

He said the process for allocating stock during supply contraints was "complex".

"Our view is that adopting a simple 'fair' pro rata allocation across all our customers, including export customers, could in this situation result in a reduction of supply to Aotearoa."

Sanitarium claimed The Warehouse, several weeks ago, had accepted the company's offer of other products "to ensure that their customers continued to enjoy affordable, nutritious breakfast cereals".

"It's important to note that manufacturers, like Sanitarium, do not set retail prices. Retailers compete aggressively and Sanitarium have observed very competitive prices from all retailers across the market," the statement added. 

Sanitarium's revised supply allocation was being worked through and "we welcome the next order from The Warehouse", Barton said.

The Warehouse Group chief executive Nick Grayston said it was "relieved and delighted" by the decision.

"We've been overwhelmed by the support and encouragement we've received over the last week from all over New Zealand.

"Kiwis have made it loud and clear just how much fairness and choice matter to them and we're 100 percent committed to making groceries more affordable."