Nicola Willis says new supermarket plan could cut grocery prices

Wednesday, 27 August 2025

Minister for Economic Growth Nicola Willis says a new Government “express lane” for supermarket owners could drive down the price of groceries.

The aim of the “express lane” is to entice a new supermarket chain to set up stores across the county. Willis says there are discussions with a handful of companies looking to do so, with Costco being the the stand out contender.

The Government is under pressure over the cost of living in New Zealand. According to Stats NZ, grocery prices increased 5.1% in the year to July 2025. The cost of milk, butter and cheese was leading the price spike, Stats NZ said, with butter up a staggering 42.2% - up to $8.59 per 500g block.

Willis has been fronting the Government’s response to this cost of living crisis, and on Wednesday she finally outlined what the Government would do to tackle supermarket prices.

In short, the Government would amend regulations with the goal of speeding up the process of opening supermarkets.

It would add supermarkets to the Fast Track Approvals Act, and also change the Overseas Investment Act to encourage foreign investors to open supermarkets in New Zealand. There would also be law changes to make it harder for the duopoly to use “predatory pricing” to try and snuff out competitors.

The Fast Track Approval would only be available to supermarkets that were “enhancing regional competition”, she said. That would mean, in most cases, Foodstuffs and Woolworths would not be able to apply for fast tracked consents.

While Willis said there had been positive conversations with Costco, she couldn’t guarantee on Wednesday that these sweeteners would attract new supermarkets.

And if these new measures didn’t attack new investment, she left open the door to a forcibly operating the supermarket duopoly. That suggestion was unpopular with her Cabinet colleague, ACT leader David Seymour.

In a pointed statement on Wednesday, he said: “Heavy-handed interventions, or even the threat of them, scare away the very investment that would make the market more competitive.”

Willis said she thought Seymour and her were, ultimately, in agreement that cutting back “red tape” was the best solution to bringing in new businesses. The Government also ruled out financing its own supermarket venture.

Labour finance spokesperson Barbara Edmonds said, by the sounds of it, these measures had all been suggested back in 2022. She questioned why the Government had not yet written a bill to make these changes.

“After two years, we still haven’t seen legislation to disrupt the market power,” she said.

The Government had been talking with potential supermarket builders since March, but it didn’t talk to two of the biggest global operators. Both Aldi and Lidl opted to ignore the Government’s requests to chat. Willis said she hoped these measures would be seen as a “welcome mat”, even if they hadn’t been interested earlier.

Costco already operated one store in New Zealand, with its mega West Auckland site.

“We have been in talks with Costco about its plans to open more stores in New Zealand,” Willis said.

Costco is a major international grocery player with annual revenue exceeding New Zealand’s GDP. But Willis said the company had told the Government it wasn’t easy setting up here.

“They laid out really clearly the headaches they faced when they opened their store in West Auckland. They compared our processes with those in Australia and pointed out how much more expensive and cumbersome they are than what they've experienced in other countries,” she said.

In designing these policy changes, she said the Government had gone back to the five companies - including Costco - that had signalled their interest in expanding in New Zealand.

In West Auckland, grocery pricing studies have shown supermarkets had lowered their prices on products such as butter to compete with Costco.

Last month, Willis met Fonterra boss Miles Hurrell to discuss the price of dairy products. After that meeting, Willis took aim at supermarkets.

She said Fonterra made it clear it did not control retail prices and that the final price at the checkout was set by supermarkets, whose contracts and pricing strategies vary.

Willis has spoken often about wanting to end the “supermarket duopoly”, and earlier promised there could be “significant reform”.

In 2022, the Commerce Commission found Foodstuffs and Woolworths owned about 90% of the grocery market. Those two companies own the brands Pak’n Save, New World, Four Square, Gilmours, Woolworths and Fresh Choice.

Willis has ruled out the Government stepping in to create its own supermarket, and on Wednesday appeared dismissive of suggestions that iwi could look to invest in the grocery market. But she insisted she had a plan to bring down supermarket bills.