Unfulfilled Promises on Supermarket Reform

For those who don't have a premium subscription to ThePost and Stuff, here's an opinion piece of mine that they published earlier this week.

21 February 2026 by Ernie Newman

“I am considering a possible structural separation of existing entities in the New Zealand grocery sector.”

“I have commissioned specialist external advice on ways in which the existing supermarket duopoly could be restructured to improve competition, including advice on options for de-merger of existing brands, (and) the potential impacts of structural separation of existing entities.”

Hugely encouraging promises from Economic Development Minister Nicola Willis in a speech on 30 March last. A speech that revealed her considerable understanding of not just the cause of our excessive grocery prices, but the reality that structural separation of existing entities – Foodstuffs and Woolworths – is the only viable way to fix it.

That was seriously refreshing and encouraging. Willis seemed to be distancing herself from the lazy thinking of many of her political colleagues who have swallowed hook, line and sinker the constant refrain from the far right that all you have to do is deregulate everything and competition will miraculously emerge.

It hasn’t and it won’t – or certainly not on the scale we need. The issue is not that we need a whole lot of shiny new stores – we have more than enough. What we need is proper competition among those we have – competition like it once existed before Woolworths and Foodstuffs scuttled through regulatory gaps, bought out every competitor and created a duopoly which has become the proverbial license to print money.

What we need is a courageous enforced breakup. One like we achieved in the telecommunications sector twenty years ago. That one dramatically reduced our phone and Internet prices and sparked huge innovation. The rest of the economy took off like a rocket in response. Go Nicola – she gets it!

Duopolies are widely seen by competition experts as delivering collusive, or “tacit collusive” behaviors – the players know they can make more money by keeping prices at excessive levels and not fighting on price, than by trying to take market share from each other. The magic number where proper competition kicks in is three (and no, that has not brought our banks into line but the issues there are quite different and far more complex.)

The saying “two’s company, three’s a crowd” in commerce could read “two’s collusion, three’s competition.”

But getting back to Nicola Willis, the question is what has happened since? There’s been silence from the Minister’s office, and although the grapevine suggests there is still some research happening, any evidence of progress on the promise of “possible structural separation of existing entities” seems totally absent.

Yet that strong speech with its promise of real action is almost a year old.

Has Willis been captured and ground down by the ferocious lobbying from the far right, supported by their almost unlimited funding and lobbying resources? Can it be that if you say something often enough and loudly enough people – even smart politicians – will believe you?

Or have some of her own political colleagues shut her down? Its very clear that many in our current parliament get very confused between the interests of “big business” – think Fonterra, Unilever, Air New Zealand – and those of the up-and-coming smaller businesses like your local vegetable grower, or specialty cheese company, or the sadly failed grocer Supie. Often the needs of small businesses differ from those of heavyweight incumbents and sometimes they are diametrically opposed. But the current generation of politicians seems not to understand this reality, nor the massive weight of money that powerful businesses with market power can devote to preserving their lofty position.

Kill off today’s small business – for example by depriving them of distribution channels - and you kill tomorrow’s star performers.

Meanwhile supermarket prices continue their monthly surge. The range of products continues to diminish to the point that empty shelves are common. Healthy staples like the humble lamb chop are being displaced by heavily processed alternatives such as sausages – effectively the supermarket sector is driving down the quality of our national diet to satisfy its own greed. More is being sourced offshore. Shrinkflation, and cynical, deliberate price confusion, soon to be enhanced by AI, continues.

Daily.

When Minister Willis made those ambitious promises, she had a runway of about 19 months until the next election. She is now down to 8 months.

Desperate shoppers are way overdue for an update. Please Minister, what hope can you offer?

ENDS

FOOTNOTE: This was written the day before Woolworths announced a 16% rise in their new profit for the half year.