Monday, 4 March 2013

Weet-Bix - with tax incentives.

You see them everywhere, in the supermarket shelves, in your home, in others homes, at camping grounds, in fact anywhere that humans habitate.  The humble Weet-Bix is a New Zaland Icon as famous as Marmite or the Buzzy Bee.

But what of Weet-Bix and more importantly the company that manufactures the product?  Well most are aware that Sanitarium is a company run by the Seventh Day Adventist church and as the link suggests benefits from tax breaks that they are entitled to as a charity. But something doesn't add up.  When you start to look at some figures you soon see that maybe there needs to be more questions asked about those tax breaks.

Let's first address the status of this survey.  According to Statistic New Zealand figures there are 1,651,.542 dwellings in this country.  That's a start point.  Now lets say that 75% of those dwellings buy Weet-Bix (I'm only using this product as it's easier to gauge numbers) which means 1,238,656 dwellings weekly buy a packet of Weetbix.  Now whether they buy the regular (small) (at $3.50) or larger pack (at $6.30) is hard to gauge, so let's settle on a mid range price of  $4.90  So that means that Sanitarium earn (just from Weet-Bix) in excess of  $290 million a year.  As there would be very little in the way of R&D (unless they use their Weetbix income for other products) and the only other costs they would have being Wheat products et al and production and delivery costs (recouped) where does the rest of the money go?

As seen in the link, Sanitarium state they are a charity and all money goes back into the community.  That's fair and well and good, but do those profits indeed drive chosen charities?  I have no idea what those aforementioned production costs are, say maybe 30-40% so that leaves say an average of 65% of profit (about $190million) going into charities.  I see they drive the Breakfast in schools programme, probably their biggest cost as a charity goes.  500 Schools with varying populations and users of the programme so too hard to establish a semi accurate figure, but I'm sure it wouldn't snaffle more than $50million a year ( I might be wrong).

And I am pretty sure they wouldn't use more than $30 to 40 million on the remaining charities.  So at rough estimate, they have about $90 million at their disposal.  Remember these figures are based purely on supposition and suggestion.  Only Sanitarium can answer all the questions accurately and as a company (and a church) they will be very reluctant to do that (would you??).

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