All options are on the table to deliver a better deal for supermarket shoppers, Economic Growth Minister Nicola Willis says.
“I am issuing a Request for Information (RFI) asking potential supermarket challengers – both in New Zealand and overseas – what regulatory changes are needed to help them compete at a national scale and drive grocery prices down.
“At the same time, I have asked officials for advice on ways in which the grocery sector could be restructured to increase competition.
“New Zealand grocery prices are high by international standards and Kiwi shoppers are being poorly served by a market effectively dominated by just two major players – Foodstuffs and Woolworths.
“This lack of competition is the result of a series of mergers that have occurred over the past 30 or 40 years.
“Despite well-intended reforms in recent years, competition in the grocery market has not improved. Kiwis are still missing out on competitive grocery offerings.
“The purpose of the RFI is to identify the regulatory and legislative steps necessary to facilitate increased competition at scale.
“I am seeking information from a range of potential investors, on what it would take for one or more new grocery retailers to enter the market on a national scale, or for existing competitors to grow to sufficient size to materially increase competition.
“I also want to know what regulatory and commercial barriers to competing potential new entrants see and what they would like the Government to do about those barriers.
“I am concerned that more significant action may be required to foster genuine competition. Therefore, I have commissioned specialist external advice on ways in which the existing supermarket duopoly could be restructured to improve competition.
“Officials are working with the appointed advisors to consider options including a possible demerger of existing entities.
“In mid 2025, once I have considered the evidence coming in from the RFI, and the Commission’s work, I will bring further recommendations to Cabinet.”
“No decisions have been made yet, but if Cabinet decides legislation is necessary, I expect to introduce it to Parliament by the end of the year.”
FGC welcomes the announcements
The NZ Food & Grocery Council welcomed these announcements and commends Minister Willis for swift action since taking on the economic growth portfolio and grocery market regulation. The announcement indicates a carefully considered and designed course of action to explore options for addressing these complex market challenges. The RFI process will proceed at pace, with information sought in the next six weeks. Work on market structure options will continue while this occurs, as will the Commerce Commission’s work to complete its wholesale inquiry, its analysis into land-banking issues, and its second grocery report.
Raeweyn Bleakely, NZ FGC Chief Executive, said: “It is encouraging to see that the steps announced will be actively led by the Minister, with the clear intention and commitment to thoroughly investigate options and provide directional clarity in a relatively short time frame. We look forward to representing our members’ views throughout this process to ensure any options take into account the impacts on suppliers and what is required for suppliers to have the confidence to invest and innovate.
“We await the Commerce Commission’s release of draft reports on both the Code and Supply inquiry processes. These were due by 31 March 2025, but we have been advised they are likely to be later than this.”
