NZ shoppers get a good deal from supermarkets, Woolworths says

Friday, 16 May 2025

Woolworths says it is a ‘misconception’ that New Zealander are overpaying for groceries.

Contrary to popular “misconception”, New Zealanders pay less for their groceries than Brits or Aussies, if GST is taken into account, says supermarket giant Woolworths.

It also claimed the “interventions” floated by the Government could push up grocery prices by about 6%, by adding costs to the system.

Woolworths, which owns the Woolworths, Countdown, Fresh Choice and SuperValue brands, has issued a ‘public paper’ seeking to counter the narrative in the Ministry of Business, Innovation and Employment “Request for Information” (RFI) issued in March.

The Request for Information called for parties interested in getting government help to set up a supermarket chain to take on the Woolworths and Foodstuffs (the owner of Pak‘nSave, New World and Four Square brands) to contact it.

Finance Minister Nicola Willis pledges to break the supermarkets' oligopoly power.

Finance Minister Nicola Willis told The Post this week there had been a lot of interest in the RFI, which the Government hopes will eventually lead to serious competition for the incumbents. A 2022 Commerce Commission market study found competition was muted in the highly concentrated supermarket sector, and that “New Zealand grocery prices appear high by international standards”.

But Woolworths has now published a paper that claims New Zealand households are getting a good deal from its supermarkets, and said: “The only example we are aware of involving a government-mandated change in supermarket ownership was Venezuela’s 2010 nationalisation of the Exito and Cada supermarket chains.

“Seven years later, the nationalised chains had shut 60% of stores and cut 9000 jobs.”

The Woolworths’ paper claimed: “Our assessment of the impact here is sobering, the structural interventions floated by the government would increase Kiwi food prices - potentially by up to 6%, by imposing costs and losses to the grocery sector of between $350 million to $750 million per year.

“The fact is, New Zealand grocery prices are cheaper than comparable countries when we take account of GST.”

And it said: “Woolworths New Zealand profits have been in decline and currently lag our global peers.”

It said its three-year average net profit after tax was lower in New Zealand than it was in Australia, with Aldi, Coles, Walmart, and Tesco all earning more.

Woolworths’ evoked the spectre of Venezuelan supermarket reforms in its paper.

Its net profit after tax was lower than Australia’s Metcash, and the UK’s Sainsbury’s and the US’ Kroger, it said.

Woolworths’ paper said New Zealanders paid less for a basket of 20 common household items than shoppers in Australia and the UK, if this country had the same sales tax exemptions on food as Australia and the UK.

“If New Zealand matched the GST/VAT exemptions in the UK and Australia then New Zealanders’ grocery prices for that basket would be 10% lower,” it said.

It did not name the 20 items, or publish detailed calculations, but told The Post that the 20 items were white flour, canned tomatoes, full cream milk, Royal Gala apples, carrots, beef mince, Weetbix, tea bags, white sandwich bread, full-fat block cheese, frozen peas, penne pasta, white sugar, salted butter, toothpaste, dishwashing detergent, shampoo, hand soap, toilet paper, and rubbish bags.

The public paper included three mocked up receipts showing the cost would be $98.40 in New Zealand, $103.90 in Australia, and $131.30 in the UK.

What Woolworths' public paper claimed a basket of 20 basic grocery items could cost, if sales taxes were equalised, in New Zealand, Australia and the United Kingdom.

Those figures appeared to show that the number was calculated as an average of prices at a variety of stores, including not only Woolworths stores in New Zealand, but Pak‘nSave and New World too.

It said its prices had gone up by less than the rate of inflation in the last decade, and had risen less than its costs.

It said New Zealand was a long way from many of the countries that supplied the items it sold, leaving it with freight costs that were 18% higher than its stores in Australia.

“We also need to correct a few misconceptions about Woolworths and our industry,” the Woolworths paper, published on Friday, claimed.

“Competition is intense and increasing,” it claimed, saying people were shopping around more than ever for low prices.

In March, Nicola Willis announced her plans to boost supermarket competition.

It name-checked Costco as a rising “bulk-buying“ provider, but said it also faced competition from specialty retailers and supermarkets to subscription meal services.

There have been calls for the giant supermarket operators to be split up, but Woolworths’ paper said: “Breaking up the grocery sector would push shopping bills higher.”

Willis has been outspoken on grocery prices.

In March, she said: “Kiwi shoppers are being poorly served by a market effectively dominated by just two major players - Foodstuffs and Woolworths. This lack of competition is the result of a series of mergers that have occurred over the past 30 or 40 years.”

In February, she said: “The major supermarket chains should listen up: our Government is on the side of Kiwi shoppers and we will act to defend their interests.”