The first annual report of grocery commissioner Pierre van Heerden shows there has been little meaningful improvement in competition since the Commerce Commission’s final report on its grocery market study released in March 2022.
The big supermarket chains Foodstuffs (North and South Island) and Woolworths NZ are still making excessive profits, and the customer is still getting a raw deal.
The market study was based on data pre the Covid-19 pandemic, but the later data used for the annual report, covering 2019 to 2023, shows retail margins for New World, Pak’nSave and Woolworths/Countdown brands went up 3.1 percentage points on average across all non-fresh products. It is small comfort the corresponding increase in fresh products was 0.4 percentage points.
If the changes brought in as a result of the market study were supposed to scare or shame the big chains into behaving better, there is scant evidence of that.
One of the big concerns about the sector before the market study, was that the big supermarkets who also own the major wholesalers, were holding suppliers to ransom with one-sided deals.
Also, small retailers wanting to buy groceries to sell in their shops often had to buy at the supermarkets and then add their own mark-up.
Mr van Heerden’s report suggests nothing much has changed.
The commission’s analysis showed retail prices of the major grocery brands have been increasing faster than the prices the big supermarkets pay to their suppliers.
We had hoped pressure to free up wholesaling would make it easier for dairies and other small shops to buy goods at reasonable wholesale prices. However, few are signing up with the big wholesalers. The prices they are being charged are often higher than the supermarkets’ retail prices, and wholesalers are severely restricting the number of top-selling products they are prepared to sell them.
The hope other big players might enter the wholesale and supermarket spaces seems unlikely to be realised soon or ever, even with a stop to the covenants on land used by the big supermarkets to deter competitors.
Mr van Heerden is going to investigate the wholesale sector further. He has indicated he might ask Commerce Minister Andrew Bayly for the power to require the major supermarkets to sell wholesale products to their smaller rivals for the same price as to their own stores.
He told RNZ the way to increase competition was to cut back "thickets of regulation" dissuading new entrants, whether in overseas investment, resource management or labour laws.
Who knows what sway he will have, but the coalition government’s lack of cohesion about what should happen next is not a hopeful sign.
Putting some snap, crackle and pop into the soggy cereal reform will ultimately involve political willingness to take on the powerful lobby of Big Grocery.
We are not convinced the coalition will have the stomach for that.
Grimaldi shows grit
Dunedin Paralympian Anna Grimaldi’s win in the 200m at the Paris Paralympics to secure New Zealand’s only gold medal of the games was a stunner.
That she could pull this off a day after disappointment in the long jump, where she had previously won two gold medals, says much about her perseverance, unflappability and love of sport.
This was her third-string event. Not only did she win it, but she did also it with a personal best and set Oceania records (first in the heat and then the final).
Grimaldi has been a great ambassador for the 2024 Games, initially as co-flag bearer for the New Zealand team, as a bronze medallist in the 100m and now as a gold medallist.
If there were an award for sheer exuberance and enthusiasm, she would be unbeaten.
We trust this remarkable young woman will be celebrated in fine southern style when she returns home.
