95bFM Supermarket duopoly' responsible for rising food prices, says Consumer NZ
20 May, 2022
Interview by Casper McGuire, adapted by Joel Armstrong
Chief Executive of Consumer NZ, Jon Duffy, says that supermarkets making $1m in excess profits per day is not acceptable. Photo: Unsplash.
Supermarket company Foodstuffs, owner of New World, PAK'nSAVE, and Four Square, announced a 10% price cut on 110 commonly purchased items over 13 weeks starting on 16 May, after growing concerns about increasing food prices.
This came after Countdown, owned by Woolworths, announced they would lock prices on hundreds of 'essential' produce during the coming winter months.
But Jon Duffy, Chief Executive of Consumer NZ, told Casper McGuire on 95bFM's The Wire that these measures aren't enough and competition surrounding the supermarket industry isn't acceptable.
"We need to be concerned if the only thing putting downward pressure on prices is some bad publicity that the supermarkets are getting. That suggests to me that competition is not working as it should."
The Commerce Commission found that supermarkets are making $1m in excess profits per day. Duffy said that this is what is contributing to the cost of living, specifically the rise in food prices.
"If we can eliminate the ability for supermarkets to make supernormal profit, that is going to help in the long term, even when we don't have extraordinary inflation pressures outside of what's in the supermarket's control."
Food prices have increased drastically internationally due to Russia's invasion of Ukraine and COVID-19, causing disruptions in the industry.
However, Duffy argued that the duopoly of supermarket competition in Aotearoa does not allow for reasonable prices.
Duffy said the government helping new entrants set up competing supermarkets with Foodstuffs and Woolworths would force them to offer better prices and better service.
$11m has been allocated in the government's 2022 Budget towards reducing grocery prices by introducing more competition.
The government intends to push through legislation under urgency over the next few days to crack down on supermarkets using restrictive covenants to prevent competitors from accessing land to open new stores.
"This is a major first step in delivering on our commitment to ensuring New Zealanders get a fairer deal at the checkout," Commerce and Consumer Affairs Minister David Clark said.
Minister Clark is set to make an official decision on regulating the supermarket industry at the end of this month.
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