Iwi bid to challenge supermarket duopoly suffers setback

Sunday, 23 February 2025

Waikato Tainui’s bid to become a major player in the supermarket industry appears to have faded away as quietly as it began.

An ambitious plan led by Waikato Tainui to launch a third supermarket group to challenge the existing duopoly is understood to have become bogged down after millions of dollars were spent on a business plan.

Sydney University supermarket researcher Lisa Asher has meanwhile poured cold water on the frequently discussed chance of German supermarket group Aldi shaking up the New Zealand market any time soon.

Asher said Aldi had entered Australia ‒ where it now had 600 stores ‒ 24 years ago, but its roll-out there had been slow and was not yet complete.

Economic Growth Minister Nicola Willis signalled earlier this month that the Government was ready to pull out the stops to encourage more supermarket competition.

But multiple industry sources have said her specific offers to remove red tape and help free-up land for new supermarkets would make little difference.

The Sunday-Star Times learnt in 2023 that three iwi had formed a partnership with British supermarket giant Iceland and were investigating taking on Foodstuffs and Woolworths NZ.

The other iwi involved in the venture were Tauhara North and Te Wairoa.

It is understood that they had been intending to kick off with at least 50 stores.

“The idea was that they would go around the entire country to all the different iwi who would then tip in some of their assets,” a source said.

“The dream was that iwi would front up with chunks of land in provincial centres, but I'm just not sure whether the reality quite matched the aspiration.”

Iceland Foods would have been the main wholesale partner of the iwi venture.

Waikato Tainui secured a $2.85 million loan from the Government’s Kānoa regional development fund in 2023 for a detailed business plan and to assist with fundraising.

To date, that appears to be as close as any organisation has come to pressing the trigger on a new like-for-like retailer to take on Foodstuffs and Woolworths around the country.

But it is understood that the iwi have since parted ways with both Iceland and former PwC partner Tina Kilmister-Blue and her partner, who had been providing commercial expertise for the proposed venture.

Waikato Tainui has been approached comment.

Loan documents released by the Ministry of Business, Innovation and Employment under the Official Information Act last week, after a complaint to the Ombudsman, confirm the iwi had been looking to build a new national supermarket chain with a focus on regional New Zealand.

The documents indicate the iwi had spent at least $1m on a “high level feasibility study” in 2022 that got as far as identifying several sites for further assessment.

Officials who recommended the former government approve the loan told ministers that the initiative, dubbed Paataka Kai, could increase competition, enable “kai sovereignty” for Māori and provide iwi with an opportunity to participate in a wider part of the grocery value chain.

But they also told ministers it was “medium-high risk” given the iwi would seeking to break into a “highly competitive sector dominated by two large incumbents”.

The National Party's coalition agreement with NZ First committed the Government to exploring options to “address the lack of a third entrant”.

NZ First leader and Deputy Prime Minister Winston Peters told The Post the Government had further plans it was trying to develop.

“It's a bit like the energy industry and the state of the ‘gentailers’. We've got a lot to turn around.”

Progress needed to be made this side of the next election, he said.

“It’s no so easy, but customers and the growers and providers to the supermarkets are being ripped off.”

A break-up of the supermarkets had long been justified, he said.

“You've got a lot of options here; allowing on somebody to have 25% or 20% of the market ‘max’ – all these things are possible.”