Labour and National clash over breaking up New Zealand’s grocery duopoly, with both parties proposing structural changes to boost competition, though their approaches differ on speed, scope, and regulatory oversight.
Labour and National have unveiled competing plans to dismantle New Zealand’s supermarket duopoly, with the goal of increasing competition and lowering prices for consumers. The proposals, framed as urgent responses to a market dominated by Foodstuffs and Woolworths, reflect starkly different strategies for reform.
Labour’s Bold Push for Structural Separation
Labour’s plan, unveiled by leader Chris Hipkins, seeks to force Foodstuffs and Woolworths to separate their retail and wholesale operations. Under the proposal, independent grocers would gain guaranteed access to wholesale supplies on “fair terms,” while small chains like Four Square would be freed from anti-competitive restraints.
The party’s commerce spokesperson, Arena Williams, emphasized that the reforms would open the market so more supermarkets can offer lower prices,
citing a cost-benefit analysis suggesting households could save $560 annually on groceries.
National’s Cautious Approach and Evidence-Driven Stance
The National proposal aligns with advice from the OECD, which has highlighted the lack of competition in New Zealand’s grocery sector. The party also references a 2022 Commerce Commission market study, which found that Foodstuffs and Woolworths dominate retail, with smaller competitors exerting limited pressure. However, National’s plan would not extend to Woolworths, a key distinction from Labour’s broader approach. Willis emphasized that the party’s focus is on an unusual situation unique to New Zealand, where only two major chains operate, unlike countries like Ireland or Denmark, which have more competitors.
Profit Margins and the Case for Intervention
Both parties cite evidence of market distortion, particularly in profit margins. The Commerce Commission’s 2025 Annual Grocery Report showed Foodstuffs North Island’s after-tax profit margin at 4%, compared to 2-2.5% for Australian supermarkets. National’s analysis, reviewed by UK Competition Commission former chief economist John Davies, suggested that splitting Foodstuffs into two chains could reduce household grocery costs by $560 annually. However, the report also noted that restructuring Woolworths would dilute these benefits.
Labour’s plan also aims to address supplier fees and pricing practices. Hipkins highlighted a visit to a small greengrocer who reported buying from Pak’nSave cheaper than from wholesalers, suggesting the market is not delivering real competition.
The party argues that independent grocers are stifled by the duopoly’s control over supply chains, a claim echoed by Sue Chetwin, chair of the Grocery Action Group, who called National’s proposal largely good news
but stressed the need for decisive action.
Unresolved Questions and the Path Forward
The immediate next step is the Commerce Commission’s evaluation of both proposals. National insists its plan will only proceed if the commission approves, while Labour pledges swift legislative action if elected.
As the election nears, both parties frame their plans as necessary to put money back in people’s pockets,
but the path to reform remains uncertain.