NZ First proposes a ballistic move for supermarket sector, but is it the right call?

Tuesday, 21 April 2026

NZ First leader Winston Peters has announced a policy which would force Foodstuffs to split apart its Pak'n Save and New World supermarket brands.

Gemma Rasmussen is head of research and advocacy for Consumer NZ.

OPINION: New Zealand First has announced its election policy for the supermarket sector, and its plans are bold. It plans to break up the supermarket sector, forcing Foodstuffs to split New World and Pak’n Save so they would have different owners, leading to New Zealand having three major supermarket players.

Unsurprisingly Foodstuffs isn’t a fan of the policy, saying there is “no evidence” it would work, arguing that every New World, Pak’n Save and Four Square is owned by different people and is in competition with the other cooperatives within the Foodstuffs group.

So, what do we at Consumer NZ think about the announcement?

The grocery market study of 2022 found excessive profits were made by the duopoly. The findings left us excited about a major shake-up in the sector. What followed was underwhelming.

There has been progress in that regulatory frameworks now exist; suppliers have more formal protections, and the government and regulator are actively intervening.

This is all good in practice but whether this has resulted in fairer prices at the checkout remains to be seen, and we hear that suppliers continue to feel squeezed and vulnerable.

While breaking up the duopoly is an enticing concept, there are risks. For one, having two separate owners of Pak’n Save and New World could drive up operational costs, leading to higher food prices.

Woolworths, an established player in New Zealand is likely to stay, but if it doesn’t like the new market structure and it’s not making sense financially, it could always up and leave.

It feels like National put all its chips on an overseas third party entering the market, but that has failed dismally with the likes of Aldi, Lidl and other international players saying, “no thank you”. We’re a less appealing investment as a small country with not much more than 5 million people, geographic isolation that increases supply chain costs, and new entrants needing nationwide scale to compete effectively. Meanwhile, the existing duopoly has strong control over land and supply chains.

It also pays to remember that having a third player is not a magical solution to a perfectly functioning supermarket sector. Look at Australia, which has Coles and Woolworths in competition with each other, and then Aldi as a softer third player.

The supermarket duopoly has been widely accused of banking excess profits. Gemma Rasmussen says a tough new Australian measure is the sort of action that should force change.

As supermarket prices in Australia climbed over the last few years with evidence of rising margins and weak competition, pressure from the public reached fever pitch. Its regulator, the ACCC, ran a major supermarket enquiry in 2024-2025 and has introduced a new law in 2026 which will ban excessive grocery pricing.

What this means is that for very large supermarkets like Coles and Woolworths, it will be illegal to charge a price that is “significantly excessive” compared to the cost of supply, plus a reasonable margin.

The new law means supermarkets can’t majorly hike prices that are well over their costs without justification, and the penalties they face are eye-watering. They could be charged up to $10 million or three times the benefit gained, or 10% of their annual turnoff.

This is a solution that sends warning shots across the industry about excessive pricing, and squeezing suppliers, without applying seismic change to the industry and inadvertently driving prices up.

Overall, at Consumer NZ, we back significant changes in the supermarket sector. People have been paying too much, for too long, and tinkering around the edges with regulation isn’t enough.

My hope is New Zealand First has done its due diligence before proposing breaking up the supermarkets, because the last thing households need is for prices to climb higher at the checkout.