The National Party has proposed breaking up supermarket giant Foodstuffs into two rival chains, threatening structural separation that officials project could lower grocery prices by up to 5 percent and save households up to $1,320 annually. Business groups have strongly condemned the election pledge as a chilling intervention.
National Unveils Supermarket Break-Up Plan Tied to Commerce Commission Review
The National Party announced a major election pledge to sever Pak’nSave from New World in an effort to drive down grocery prices across New Zealand. Under the proposal, the company would be split into two separate nationwide supermarket groups—Pak’nSave on one side and New World alongside Four Square on the other—leaving Woolworths as the third major competitor.
However, the proposed structural separation is contingent on a six-month review by the Commerce Commission to determine whether splitting the co-operative would genuinely leave shoppers better off. If the watchdog grants approval, National intends to legislate the separation.
According to finance spokesperson Nicola Willis, the shake-up could eventually save households up to $1320 a year. Government-commissioned modelling released alongside the policy estimated prices would drop about 3.5 percent in the first year following a separation, with financial gains compounding as the new rival chains establish independent operations. By the year 2035, projected annual household benefits would range from $200 to $1320 depending on income and family type.
Independent economists who authored the report issued cautionary warnings, noting that their analysis was indicative rather than definitive
while highlighting potentially insurmountable legal and implementation hurdles. Willis emphasized that individual store owners within the co-operative would not be forced to sell or rebrand, but the overarching corporate structures would be divided to force competitive pricing, range expansion, and better service.
Foodstuffs Responds as Business Groups Attack the Policy as Alarming
Foodstuffs confirmed it is thoroughly reviewing the significant issues raised by the proposed restructuring. Dean Waddell, owner of Pak’nSave Tauranga and chairperson of Foodstuffs North Island, told Morning Report that the company was gutted
by the announcement after investing substantial time in explaining the co-operative structure to political parties.
“When we heard it we were pretty gutted and concerned. We’ve spent a lot of time educating political parties around our co-operative structure.”
Dean Waddell, chairperson of Foodstuffs North Island, via RNZ
The policy drew immediate and severe pushback from leading New Zealand business organizations. BusinessNZ likened the plan to Labour’s previous offshore oil and gas exploration ban, arguing that dismantling private enterprises damages the country’s reputation for regulatory stability.
“This is a very concerning move by the National Party and sends a chilling signal to businesses across New Zealand that the Government can break up businesses. It also sends the wrong signal to foreign investors looking to invest in New Zealand. We consider this to be in the same league as Labour’s ban on oil and gas exploration and New Zealand First’s promise to split up the gentailers.”
Catherine Beard, Director of Advocacy at BusinessNZ, via RNZ
BusinessNZ Director of Advocacy Catherine Beard pointed out that supermarkets rely heavily on scale across purchasing, logistics, and technology. She warned that breaking them apart could create operational inefficiencies and duplicate costs that would ultimately be passed on to everyday shoppers rather than lowering bills.
The Employers and Manufacturers Association echoed those concerns. Alan McDonald, head of advocacy for the group, argued that the policy undermined private property rights and sent an unsettling signal to international investors.
“Seeing a right-of-centre, business-focused political party like National suggest this type of policy will sit uneasily with businesses in New Zealand. It might be a populist policy for a grumpy electorate, but that doesn’t make it a good policy.”
Alan McDonald, head of advocacy at the Employers and Manufacturers Association, via RNZ
Market Concentration and the Path Forward
The policy debate unfolds against persistent market dominance figures. The Commerce Commission’s latest monitoring shows that Foodstuffs and Woolworths continue to control about 82 percent of the domestic grocery market, with virtually no movement in core competition metrics over the preceding year.
Willis maintained that National is committed to proceeding cautiously through regulatory advice rather than governing from the cabinet table.