Foodstuffs, Progressive duopoly keeps supermarket prices high

Tue, 10 Nov 2009 6:11p.m.

By Charlotte Tonkin

There was confirmation today that New Zealand grocery prices have risen faster than every country but one in the developed world.

The Australian researcher behind the study says you can blame the fact that most of our supermarkets are owned by just two companies. As a result, Kiwi shoppers are being held to ransom at the checkout.

According to figures from the Organisation for Economic Development and Co-operation, consumers are paying 42.5 percent more for groceries than they were 10 years ago.

Consumer New Zealand says supermarket giants Progressive Enterprises and Foodstuffs are to blame.

“It does confirm that the cosy duopoloy does work to keep prices high, and there really isn’t as much competition as there should be,” says Consumer NZ CEO Sue Chetwin.

The research, which spans over a decade, shows that out of 30 countries:

• Korea topped the table with a 48.2 percent increase

• New Zealand came in second with 42.5 percent

• Australia was third with 41.3 percent.

• Japan had the lowest increase over the period with just 1 percent.

Foodstuffs operates New World and Pak N’ Save. Its managing director, Tony Carter, rubbishes the notion it is not competitive and is involved in a duopoly.

“I can assure everyone it is extremely competitive. It is what gets me out of bed in the morning – to come and try and compete against Progressive and to do the very best job I can for our customers,” he says.

Progressive Enterprises, which is behind Countdown, Foodtown and Woolworths, would not appear on camera – saying it had not had enough time to review the information in depth.

Both companies argue food is expensive because of global factors. But the researcher behind the findings says that does not stack up, because countries like the United Kingdom are also subject to global pressures and its increase was just under 33 percent – 9 percent lower than New Zealand’s.

Consumer Affairs Minister Heather Roy says the only solution is to encourage more businesses into the market.

“Our job is to set the environment so that compliance costs are low,” she says. “When there is a healthy market operating and lots of competition, prices for consumers will be lower.”

But until the Government is successful, the only advice is to shop around.

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