Supermarket split: Nicola Willis looking ‘in detail’ at option, will release advice before election

Wednesday, 22 July 2026

The prospect of New Zealand’s major parties including a supermarket break-up in their election policies appears to have risen from the ashes, amid signs existing attempts to increase competition have all but stalled.

Minister for Economic Growth Nicola Willis told The Post there was “clear evidence” the groceries market was not as competitive as in some countries and she expected to release analysis on the merits of further reforms before the end of the parliamentary term.

The Commerce Commission reported last month that Foodstuffs and Woolworths’ share of the retail groceries market had been essentially unchanged over the past five years, averaging 82% last year.

Willis said she believed there could be merit in a “banner split”, making clear one option might be to require Foodstuffs to split Pak’nSave and New World into separate businesses, as NZ First proposed in April.

Read more:

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• Supermarket break-up: NZ First to campaign on splitting Pak’nSave and New World

“The option of a structural separation in which we take interventions to encourage them to compete more strongly with each other … is one that I have been looking at in detail,” she said.

That included “looking at how you would actually deliver that change, what would be required from an implementation perspective, what the costs of that change would be, and what the benefits would be, because obviously any government intervention would be a significant step”, she said.

“We would want to have confidence that the end result would be a more competitive industry that would deliver better prices and better options for the New Zealand shopper, and so it’s not something you go into lightly.”

Willis originally instructed officials to conduct a cost-benefit analysis on “specific options for restructuring the supermarket duopoly” in August last year.

At the time, that was widely viewed as kicking the possibility of structural reform into touch because of opposition from the ACT Party, which has made clear it believes the solution to increasing competition relies on reducing red tape.

However, Willis’ decision to retain responsibility for the supermarket sector when the commerce portfolio was transferred from fellow minister Scott Simpson to Cameron Brewer earlier this year, turned heads.

Simpson had previously relinquished specific responsibility for supermarkets to Willis, because of a declared conflict of interest.

Willis said she was taking a thorough approach to possible reforms, given the risk of “unintended consequences”, and no proposals had yet gone to Cabinet.

“We’re continuing the cost-benefit analysis, external critique of that cost-benefit analysis, ongoing work on it, and it is my intention that the results of that work will be released before the end of the parliamentary term.

“The National Party hasn't determined our policy for the campaign on that yet, but we will do, and we will have more to say about this in the campaign.”

Responding to concerns that Pak’nSave and New World could converge in the mid-market and lose their differentiation in a forced split — potentially leaving shoppers with more competition but between more look-alike brands — Willis made clear her chief concern was pricing.

“I would only want to make a change if I thought it was going to result in more competition,” she said.

“For me, what competition means is that you would see Pak’nSave more actively competing for the New World shopper by offering better prices. You would see the New World operator more actively competing against Pak’nSave in order to deliver better prices.”

Labour commerce spokesperson Arena Williams said the party did not agree with forced banner sales of the type NZ First had already proposed. It is understood to have been put off by the potential costs and risks.

The party has continued to emphasise the potential for wholesaling — requiring Foodstuffs and Woolworths to sell groceries they buy to rival retailers — to improve competition.

Williams said one of Labour’s goals was to improve market access for food growers, manufacturers and “retail competitors”.

The former Labour government implemented a wholesale regime and gave itself the backstop power to require Foodstuffs and Woolworths sell groceries to rivals at prices and on terms and conditions that could be set by regulators.

But the Commerce Commission backed off recommending additional wholesale regulations on supermarkets earlier this month, after a 20-month inquiry.

Responding to that decision, Labour leader Chris Hipkins said wholesaling was “clearly a major issue”.

But he said he did not see structural reforms and an emphasis on wholesaling as being “mutually exclusive”, appearing to leave open the possibility of some other form of structural separation.

The most extreme implementation of the wholesaling approach would be to break up the supermarkets in a different way to the one the officials have explored, by forcibly separating their store networks from their distribution centres.

Willis said one risk of that approach would be “you essentially create another monopoly elsewhere; that you end up having a lack of competition at the wholesale level, which then embeds high prices through the supply chain”.

She agreed large suppliers might gain market power if they were able to get their products into both Foodstuffs and Woolworths supermarkets through just one distribution company.

“That's certainly a risk — that you would actually concentrate, rather than create diversity of supply,” she said.

Grocery commissioner Pierre van Heerden insisted the competition watchdog was making progress improving competition using its existing tools, suggesting for example that it had played a role in preventing profit margins from rising further.

“We have the grocery sector as an enforcement priority and a large proportion of our litigation fund is spent in the grocery sector. We’ve got 15 different investigations currently running, and various court cases.”

But “with the tools that we’ve got, it will take a long time”, he said.

Willis suggested people needed to be realistic about the likelihood of a major new supermarket company entering the market soon under current settings.

“Having the fast-track provisions there and having the changes to the building consent process means that we do have a more level playing field available for entrants.

“But what I’d acknowledge is that for anyone thinking about entering the New Zealand supermarket sector right now, what they see is a very powerful duopoly with two major players in the form of Foodstuffs and Woolworths that have significant market power,” she said.

“So it’s a big ask to say ‘let’s come in and compete effectively and not get squashed by those big guys’, and that's the nub of the issue that I’m exploring.”