New Zealand's supermarket duopoly driving up consumer prices?

Kiwis are getting increasingly frustrated about the price levels in their country. Supermarkets are coming under increased scrutiny on their side of the Tasman Sea. Now the government has given the Commerce Commission increasing power to investigate what consumers pay. An upcoming law change will give it the ability to conduct market studies in various industries - and supermarkets have been suggested as a potential candidate. 

According to Consumer NZ head of research Jessica Wilson, her country had one of the most concentrated grocery markets in the world. "That concentration comes with a risk consumers will pay more than they should. "

There are only two players with size and scale. There are lots of brands – Pak'n Save, Countdown, FreshChoice, New World, Four Square – but, apart from a couple of small independent exceptions such as Farro Fresh and Huckleberry, they are owned by Foodstuffs and Australian-run Woolworths.

While they are just two companies, the duo have an enormous influence on the budgets of every New Zealander - and they're making big money.

Indeed, spending at the supermarket is a significant hit on most Kiwi wallets, and the amount they spend on food is climbing. The most detailed recent breakdown of spending is from 2016, showing average weekly household expenditure on food increased by $22 (11.6 per cent) in the three years to 30 June 2016, to $214.

Countdown claimed it was committed to making food and groceries more affordable. "In the year to June 2018, the Statistics NZ Food Price Index increased by 0.2 per cent and grocery food prices decreased 0.1 per cent. In comparison, Countdown's own food price index showed a decrease of 0.7 per cent," the company said in a statement.

According to stuff.co.nz¸ Foodstuffs also rejected the suggestion that competition might be lacking.


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