It is, on the surface, the boldest thing any political party has said about the grocery market in years. And it will be very popular. And it should be. Nearly everyone who pushes a trolley around a New Zealand supermarket already suspects they’re being ripped off.
The Commerce Commission confirmed as much when it found the duopoly was earning around $1 million a day in excess profits. A Phoenix Research survey back in 2021 found 70% of New Zealanders supported splitting up the two existing supermarket groups to create more competition. That mandate has never gone away. If anything, it has hardened.
So yes, give Peters credit for reading the room. He has moved the Overton window on supermarket reform further this week than Labour managed across six years. The structural breakup of oligopolies is the political Zeitgeist of our moment, and NZ First has surfed it twice in as many months.
But there is a gap between surfing the wave and actually changing the market. And when you look at what NZ First is actually proposing, the gap is significant.
The Policy, and what it leaves out
The announcement has three planks. There’s the structural separation of Foodstuffs into two cooperatives. There’s a set of tougher Commerce Commission penalties — fines of up to $10 million, three times the commercial gain, or 10% of turnover, matching Australian enforcement standards. And there’s a beefed-up Grocery Commissioner with binding decision-making powers, plus a new framework to address shelf access for local producers.
These are not nothing. Consumer NZ’s Gemma Rasmussen has said she supports NZ First’s push for stronger Commerce Commission and Grocery Commissioner powers, noting that since the 2022 Commerce Commission report “there has been a lot of tinkering around the edges of what was required.” Rasmussen is clear-eyed about why we are here: “It feels like National put all its chips on an overseas third party entering the market, but that has failed dismally with the likes of Aldi, Lidl and other international players saying, no thank you.”
RNZ’s Susan Edmunds reported that Professor Tim Hazledine from the University of Auckland also supports the breakup idea, agreeing that the Commerce Commission’s track record so far “had not made a difference.” Hazledine was characteristically blunt about the Commission’s timidity: “They said, please don’t, we’re not very brave here, so please don’t send us into battle. We don’t want any weapons. Thank you very much.”
So, the NZ First supermarket breakup policy is getting some expert support. But look at what the policy does not address, and the picture shifts considerably.
The Woolworths problem
The most glaring omission is Woolworths. The Australian-owned giant, which controls roughly 42% of the market, is entirely untouched by the NZ First proposal. Breaking up Foodstuffs while leaving Woolworths intact does not create a competitive grocery market. It creates a reshuffled duopoly, possibly a lopsided one.
Grocery Action Group chair Sue Chetwin was direct about this, telling NBR’s Brent Edwards that the policy “left open the fate of Woolworths” and whether concrete measures would be introduced at the wholesale level to foster true competition. This is the central problem. The broken supermarket sector is broken because it is a duopoly, not a monopoly. Any reform that treats it as the latter is starting in the wrong place.
The silence on Woolworths is not purely a matter of political cowardice, to be fair. Woolworths NZ is a subsidiary of an Australian corporate, and forcing its divestment raises complexities under overseas investment rules that do not apply to Foodstuffs. But the NZ First announcement contains no acknowledgement of this problem, let alone a proposed solution. The policy simply ignores half the duopoly.
The Distribution centre blind spot
Even the proposed Foodstuffs split has a deeper structural flaw. And it’s one that gets far less attention than it deserves.
Monopoly Watch’s research director Tex Edwards responded to the NZ First announcement with a critique that goes to the heart of why brand-level breakups can miss the point entirely. As he told NBR’s Brent Edwards: “The problem was never the number of stores. It is the distribution centre monopoly and the underlying market architecture. A Pak’n Save breakout that leaves those both intact is not competition. It is the same system with different signage.”
There are currently only two major distribution networks controlling grocery supply in New Zealand. Any new entity spun out of Foodstuffs would still be dependent on the same wholesale infrastructure. Edwards has argued for years that a genuine solution requires the divestment of distribution centres to an independent operator. Without that, competitors are permanently disadvantaged before they stock a single shelf.
This dimension of the debate should be front and centre. The Grocery Action Group’s Chetwin has also stressed it: only reform targeting both retail and wholesale will deliver genuine relief to consumers at the checkout. Yet NZ First’s announcement is essentially silent on wholesale reform.
The Wrong split
Even on its own terms, the chosen split may be the wrong one. Hazledine, as reported by RNZ’s Edmunds, thinks NZ First has chosen the wrong split. His argument is that the economically effective breakup would be New World on one side and Pak’n Save with Four Square on the other — so that the two new entities would be competing against each other in every market from the outset. A brand-based split, by contrast, could easily result in two players who occupy different geographic territories or different price segments without ever genuinely competing head-to-head in the same town.
University of Sydney retail academic Lisa Asher adds a structural complication that has barely featured in the coverage. As reported today by Brent Edwards in the NBR, Asher points out that NZ First’s policy assumes Foodstuffs is a single entity that can simply be divided in two — but it cannot. Foodstuffs South Island (FSSI) is a genuine cooperative. Foodstuffs North Island (FSNI) is not: it operates as a franchise model, and the two are legally separate entities.
According to the NBR, she says that “politicians and the news media mistook Foodstuffs as a single company, but FSSI and FSNI were separate entities,” and raises an uncomfortable question: why do the two entities never enter each other’s island for growth? “Is there an agreement in place, whether verbal or understood, not to enter the other island?”
Asher’s proposed fix, as reported by Brent Edwards, is therefore quite different from NZ First’s. Rather than a brand-based split, she argues the 2013 merger that created Foodstuffs North Island should be reversed. That could result in two nationwide supermarket chains plus three regional ones. This would be a far more genuinely competitive architecture than what NZ First is describing.
These are not pedantic objections. They go to whether the policy can actually work.
Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society. This article was first published HERE
The Commerce Commission confirmed as much when it found the duopoly was earning around $1 million a day in excess profits. A Phoenix Research survey back in 2021 found 70% of New Zealanders supported splitting up the two existing supermarket groups to create more competition. That mandate has never gone away. If anything, it has hardened.
So yes, give Peters credit for reading the room. He has moved the Overton window on supermarket reform further this week than Labour managed across six years. The structural breakup of oligopolies is the political Zeitgeist of our moment, and NZ First has surfed it twice in as many months.
But there is a gap between surfing the wave and actually changing the market. And when you look at what NZ First is actually proposing, the gap is significant.
The Policy, and what it leaves out
The announcement has three planks. There’s the structural separation of Foodstuffs into two cooperatives. There’s a set of tougher Commerce Commission penalties — fines of up to $10 million, three times the commercial gain, or 10% of turnover, matching Australian enforcement standards. And there’s a beefed-up Grocery Commissioner with binding decision-making powers, plus a new framework to address shelf access for local producers.
These are not nothing. Consumer NZ’s Gemma Rasmussen has said she supports NZ First’s push for stronger Commerce Commission and Grocery Commissioner powers, noting that since the 2022 Commerce Commission report “there has been a lot of tinkering around the edges of what was required.” Rasmussen is clear-eyed about why we are here: “It feels like National put all its chips on an overseas third party entering the market, but that has failed dismally with the likes of Aldi, Lidl and other international players saying, no thank you.”
RNZ’s Susan Edmunds reported that Professor Tim Hazledine from the University of Auckland also supports the breakup idea, agreeing that the Commerce Commission’s track record so far “had not made a difference.” Hazledine was characteristically blunt about the Commission’s timidity: “They said, please don’t, we’re not very brave here, so please don’t send us into battle. We don’t want any weapons. Thank you very much.”
So, the NZ First supermarket breakup policy is getting some expert support. But look at what the policy does not address, and the picture shifts considerably.
The Woolworths problem
The most glaring omission is Woolworths. The Australian-owned giant, which controls roughly 42% of the market, is entirely untouched by the NZ First proposal. Breaking up Foodstuffs while leaving Woolworths intact does not create a competitive grocery market. It creates a reshuffled duopoly, possibly a lopsided one.
Grocery Action Group chair Sue Chetwin was direct about this, telling NBR’s Brent Edwards that the policy “left open the fate of Woolworths” and whether concrete measures would be introduced at the wholesale level to foster true competition. This is the central problem. The broken supermarket sector is broken because it is a duopoly, not a monopoly. Any reform that treats it as the latter is starting in the wrong place.
The silence on Woolworths is not purely a matter of political cowardice, to be fair. Woolworths NZ is a subsidiary of an Australian corporate, and forcing its divestment raises complexities under overseas investment rules that do not apply to Foodstuffs. But the NZ First announcement contains no acknowledgement of this problem, let alone a proposed solution. The policy simply ignores half the duopoly.
The Distribution centre blind spot
Even the proposed Foodstuffs split has a deeper structural flaw. And it’s one that gets far less attention than it deserves.
Monopoly Watch’s research director Tex Edwards responded to the NZ First announcement with a critique that goes to the heart of why brand-level breakups can miss the point entirely. As he told NBR’s Brent Edwards: “The problem was never the number of stores. It is the distribution centre monopoly and the underlying market architecture. A Pak’n Save breakout that leaves those both intact is not competition. It is the same system with different signage.”
There are currently only two major distribution networks controlling grocery supply in New Zealand. Any new entity spun out of Foodstuffs would still be dependent on the same wholesale infrastructure. Edwards has argued for years that a genuine solution requires the divestment of distribution centres to an independent operator. Without that, competitors are permanently disadvantaged before they stock a single shelf.
This dimension of the debate should be front and centre. The Grocery Action Group’s Chetwin has also stressed it: only reform targeting both retail and wholesale will deliver genuine relief to consumers at the checkout. Yet NZ First’s announcement is essentially silent on wholesale reform.
The Wrong split
Even on its own terms, the chosen split may be the wrong one. Hazledine, as reported by RNZ’s Edmunds, thinks NZ First has chosen the wrong split. His argument is that the economically effective breakup would be New World on one side and Pak’n Save with Four Square on the other — so that the two new entities would be competing against each other in every market from the outset. A brand-based split, by contrast, could easily result in two players who occupy different geographic territories or different price segments without ever genuinely competing head-to-head in the same town.
University of Sydney retail academic Lisa Asher adds a structural complication that has barely featured in the coverage. As reported today by Brent Edwards in the NBR, Asher points out that NZ First’s policy assumes Foodstuffs is a single entity that can simply be divided in two — but it cannot. Foodstuffs South Island (FSSI) is a genuine cooperative. Foodstuffs North Island (FSNI) is not: it operates as a franchise model, and the two are legally separate entities.
According to the NBR, she says that “politicians and the news media mistook Foodstuffs as a single company, but FSSI and FSNI were separate entities,” and raises an uncomfortable question: why do the two entities never enter each other’s island for growth? “Is there an agreement in place, whether verbal or understood, not to enter the other island?”
Asher’s proposed fix, as reported by Brent Edwards, is therefore quite different from NZ First’s. Rather than a brand-based split, she argues the 2013 merger that created Foodstuffs North Island should be reversed. That could result in two nationwide supermarket chains plus three regional ones. This would be a far more genuinely competitive architecture than what NZ First is describing.
These are not pedantic objections. They go to whether the policy can actually work.
Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society. This article was first published HERE
1 comment:
Hang on, isn’t NZ First in government? If they wanted to do something about this then they would have already. Don’t tell me Winston is virtue signalling again?!
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