August 30, 2025 • 14 mins
This week the Government announced an express lane to fast-track consent for supermarkets that would improve competition.
The question now being raised, is whether the cost of groceries is a supermarket problem, or a wage problem.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks'd
be so yes.
Speaker 2 (00:11):
This week, as you will have caught up with, the
government announced an express lane to fast track consents for supermarkets,
for new supermarkets. I guess that would improve competition, but
the question needs to be asked, is it really a
problem with grocery prices? Is a piece by Liam Dan
saying maybe it's because we're not making enough money in
(00:31):
wages being such, our economies not doing well enough. So
the former CEO of the Food and Grocery Council, Ernie
Newman's joining us. Ernie, good afternoon. Can I hey, what
did you make of the announcement from Nikola Willis earlier
or last week?
Speaker 3 (00:46):
I guess we can say, yeah, some people the stage
of deja vu. I think I've heard all this before.
The problem we have is the news when we've got
to rebare in have it of solving the royal problems
and you know what nickolor is talking about, idea to
speed up the resource consents and that sort of thing.
(01:08):
But the damage has already been done. We went through
a couple of decades when the Duopoli bought up all
the land that was available all over the country that
might be suitable for a supermarket development and land banked it.
In otherwids, they simply bought it and put it out
to pass to doing nothing, or sold used cars on it,
(01:29):
or you know, had vap stores their tenants and whatever
the specific purpose, but making sure that no new intlant
could come into the market to compete with them. Now,
you know that would never have been allowed to happen
in the first place. But the problem is simply reversing
that situation now will not suddenly make this market attractive
(01:50):
for new entrants. The key the key problems, and a
lot of this comes out in the Communist Commissions Lays report.
It is that the wholesale side of the industry has
been completely tied up by the retailers. So that's why
you see your corner owner dropping down back and save
instead of them instead of buying through the conventional wholesale system,
(02:11):
so they're paying retail prices and then having to put
a markup on that and hope to sustain a business.
It's stuff like that that has caused the problem, and
that's that's where we need to go back to the
market structure is wrong. There is what's known in the
trader's market failure. So it's only by getting it into
the cause of the problem, which is an industry which
(02:35):
yoused to have half a dozen really vibrant players genuinely
compete againgainst each other, and has over the years gone
down to two. We need to actually look at the
factors that caused that, of which the wholesale structure is
one and used for the resource for the Communis Comission
to break that up with some legislative backing.
Speaker 2 (02:55):
So if Nichola Willis was listening to this now, then
she could she could have a few more to do
things on her list, the wholesale thing being one. But
do you think there's room for legislating on the forced
sale of banked land.
Speaker 3 (03:08):
I think it's too late to do that, to be
quite honest, Tim, you know the damage was done at
the beginning. Anyone who's who knows the finance markets will
tell you that to get a new ental, to start
a new Zealand from scratch, you'd need well over one
hundred near stores on day one. I mean, Costo has
a bit of an aberration and they don't think we're
showing any appetite to expand much anyway. But for a
(03:31):
conventional US supermarket chain like Aldi to come in from Australia,
for example, they'd need one hundred and thirty hundred and
fifty sites within their first few weeks. They also need
access to the wholesale system, and you know that is
the big part of the problem here. I was really interested.
I see the outgoing boss of Ficks Peanut Butter in
(03:54):
the media during the week and he described the supermarkets
as being a mafia like cartel, and effectively that's what's happened,
you know, the concentration of power at the wholesale level
and such that the supermarkets can get away with what
they like and stop the suppliers from supplying anyone who
(04:14):
competes with them.
Speaker 2 (04:15):
If you were king for a few days, what would
you do?
Speaker 3 (04:20):
Oh you mean on supermarkets for more generally?
Speaker 2 (04:22):
Ah, well, well, on the supermarkets, on the things we've
just been discussing to improve the competitiveness and get that,
you know, yeah, what would you do?
Speaker 3 (04:32):
Look, I would take a leaf out of the book,
the playbook that was used for telecom, because you know,
the telecom situation twenty years ago had a lot of
similarity to what we have here. There was effectively one
or two companies controlling the whole market, and we were
paying way, way, way over the repair price for our phone,
(04:52):
and we had the whole range of measures that came
in to break down their power and stop them up.
So what I would do if I was king, I'd
be really brave. I would pass the legislation that would
force the exit listing operators in the industry to split
their wholesale from their retail operations, so that we had
an independent wholesale segment, different boards, different people, you know,
(05:16):
under the Commerce Act, not allowed to collude with each other.
And then, of course the first thing they would do
is be very happy to supply groceries to any new
influent that came along, you know, the existing like night
and day.
Speaker 2 (05:29):
Because as you say this, Ernie, it all makes sense.
It seems like common sense. And I sort of wonder,
why hasn't this been done till now? I mean, sorry,
it hasn't been done yet. Why hasn't it been done?
Speaker 3 (05:42):
It's called politics, and it's called lobbying. So on the
one hand, you know, you've got politicians who are you know,
we've got a lot of very right wing left libertarian
type views in Parliament these days, who take the view
that the property rights of the existing owners should prevail
(06:02):
over the rights of the consumers to buy at fair prices.
So there is a political purdle there. The second one
is is the complicated process. It would be litigious, There
would be a risk of the food markets tying the
government up, and knots in the court system and whatever.
But you know, none of those things are any worse
(06:24):
than the problem that confronted to New Zealand and the
telecom days. That one, and we can win this one,
but we've got to have the political will. And the
other arm of that is the lobbying and the intensity
with which these people get to the politicians, and you know,
doubt in everyone's mind obfuscate with different stories and explanations
(06:46):
and so on.
Speaker 2 (06:47):
Do you think that Nikola Willis herself is being inhabited
or do you think that she is part of the
problem politically in terms of just the politics you've outlined.
Speaker 3 (07:01):
I don't know, but it's a very good question. You know, Intuitively,
I think she's a decent person. I think she's one
of the politicians we have who is a little bit
in touch with people who are not necessarily in the
upper echelons didn't come wise. I think she understands the
New Zealand society and the community better than some of
the others do. But on the other hand, I feel
(07:25):
that she continues to steer the debate in the wrong
direction with this continual coming back to if we only
fix the resource management at all, will be well, you
know it's not like that. That's not going to happen.
Speaker 2 (07:39):
Do you think how much difference are we talking that
it could make? Because I mentioned I alluded to briefly
the piece by Liam down where he said it's not
just a supermarket problem. He said, we're feeling it because
we're suffering from low wages. Have you got to take
on that.
Speaker 3 (07:52):
Yeah, I agree with Liam Danel mat part that yes,
we do have an issue with low wages in this
country and that's as much a political problem as anything else.
But that's not a reason to not the rest of
the supermarket issue. It clearly is an issue. You know,
the Communist Commission and the latest report found that in
(08:13):
twenty twenty four there was a stabilization of supermarket prices,
but since the beginning of this year they've started going
up again. I mean the Communist Commission and comment to
we will talk about butter, but Commy's Commission made the
observation that a block of butter now costs you nearly
twice what it did at the beginning of last year.
You know, think about that we're a top butter producing country.
(08:39):
There is no transport factor in well transport.
Speaker 2 (08:45):
Yes, that is the thing I was going to ask you,
because there's it's sort of like an I don't know
if it's a been metha urban truth that people say
that we often pay more for local products in New
Zealand than consumers pay overseas. But I mean you've alluded
to you know, of course there are different fewer costs
in getting the product to market. Here are we paying
more than overseas people.
Speaker 3 (09:06):
We're paying a lot more than we should. I have
no doubt about that, none at all. It's very difficult
to make definitive statements. I mean, for example, we have
gest which is hired by international standards, but other companies
have various forms of sales tax and whatever. But you know,
I placed a bit of faith in the Communists Commission,
and they clearly believe that we're paying considerably too much
(09:29):
for groceries. Now. One of the figures in their latest
report the promotional money that floats around between the suppliers
and the supermarkets, which in the form of specials and
promotions and merchandising, tees and whatever five billion a year.
Five billion. Now that's you know, that's about a thousand
(09:50):
dollars per citizens. And there's all that money floating around,
and specially now the super markets used that for large
numbers of products that change price week by week. So
you go in this week and it's eight dollars forty,
you come in next week and at ten dollars eighty,
and then the third week gets back to the original
price again. It Dixon is deliberately used to confuse the consumer.
(10:16):
You know, you tend you assume that because you've got
a decent deal on it this week, and it'll be the
same next one. Had if we had a choice of
supermarket at least one of them, the competitive reasons were
going on what they call every day low pricing, where
the consumer knows they're going to get a fair price
whenever they go into shop. It didn't have to spend
(10:38):
an hour and a half on the internet try to
workout is the best place to get the course. Plakes
on Plans.
Speaker 2 (10:43):
Say, I did some talkback on this a few days ago,
and people sort of greeted it luke warmly as an
announcement and another announcement that wasn't going to mean much.
But the thing that stood out to me was that
the two giants in the supermarket business they seem to
like the announcement too, and I thought that that was
a sign that it wasn't really very much. What was
your reaction to that.
Speaker 3 (11:04):
I couldn't disagree with you. I mean, my observation would
be that Parliament these days has stopped being an action
factory and becoming announced factory. And that's not just in supermarkets,
but just the way the politicians seem to work at present.
So my eyes tend to roll when I hear it's
going to be an announcement about something one of than
just old fiscate. You know, they divert the issue, and
(11:27):
that's clearly what's happening on the supermarket one. Obviously that
the industry itself has got the best of interest in
trying to divert the argument away from the real issue.
But that real issue is the wholesale retail, combination of
wholesale and retail, and you know, the concentration of ownership
(11:47):
and effectively two hands.
Speaker 2 (11:50):
Do people like you have a voice in this when
I mean, you've got to voice it, obviously because we're
having a chat with you. But do you still have
a Do you get sought out by politicians to seek
your advice and opinions, because I'd be sending you straight
up to the beive.
Speaker 3 (12:05):
Well, I'm far too old to be in this stuff,
and I'm I thought sometimes why I am, But I'm
in the interesting position back in You know, I've been
a sort of a business advocate for most of my career,
and back in the nineteen eighties I worked for several
years in the food and grocery industry, and much more
recently I was heavily involved in the breakup of Telecom.
(12:25):
So you know, I've got a personal land of professional
interest in this stuff, and I guess I feel a
little bit of a responsibility to contribute to the public debate.
But you know, there's a lot of people saying these things.
You know, you listen to a lot of the grocery suppliers,
like as I said, the chat from picts the other day,
(12:46):
people like Sarah Ball who ran Soupy until that them
that sadly closed down. You know, there are people who
are prepared to be honest about people in the industry,
who are prepared to be honest about the state that
it's in. But all I can hope is that the
politicians will actually focus back on the real issue here,
which is market failure, the failure of market structures to
(13:09):
deliver what we need from what we have. And they
either need to compulsorily split the wholesale from the retail
arms of the industry, which is how it once was.
All they need to force the divestment of some of
the existing brands, for example, divest New World away from
back and Sable, or Choice away from Coundown. Let's solve
(13:32):
the right problem, not the wrong one.
Speaker 2 (13:34):
Well, Ernie, thank you so much for your time. There's
so much for us to sing our teeth into that.
But I really appreciate your time. And you know, despite
the fact that you know you're retired now from that
from that role. I do hope Nichola, maybe that catches
up here for a cup of coffee. That'll be great. Well,
Willy hear shout cheers, Ernie. Thanks, that's Erny Newman. He's
(13:57):
former CEO of the Food and Gracery Council.
Speaker 1 (14:00):
For more from the Weekend Collective, listen live to news
talksz'd be weekends from three, or follow the podcast on
iHeartRadio
You're listening to the Weekend Collective podcast from News Talks'd
be so yes.
Speaker 2 (00:11):
This week, as you will have caught up with, the
government announced an express lane to fast track consents for supermarkets,
for new supermarkets. I guess that would improve competition, but
the question needs to be asked, is it really a
problem with grocery prices? Is a piece by Liam Dan
saying maybe it's because we're not making enough money in
(00:31):
wages being such, our economies not doing well enough. So
the former CEO of the Food and Grocery Council, Ernie
Newman's joining us. Ernie, good afternoon. Can I hey, what
did you make of the announcement from Nikola Willis earlier
or last week?
Speaker 3 (00:46):
I guess we can say, yeah, some people the stage
of deja vu. I think I've heard all this before.
The problem we have is the news when we've got
to rebare in have it of solving the royal problems
and you know what nickolor is talking about, idea to
speed up the resource consents and that sort of thing.
(01:08):
But the damage has already been done. We went through
a couple of decades when the Duopoli bought up all
the land that was available all over the country that
might be suitable for a supermarket development and land banked it.
In otherwids, they simply bought it and put it out
to pass to doing nothing, or sold used cars on it,
(01:29):
or you know, had vap stores their tenants and whatever
the specific purpose, but making sure that no new intlant
could come into the market to compete with them. Now,
you know that would never have been allowed to happen
in the first place. But the problem is simply reversing
that situation now will not suddenly make this market attractive
(01:50):
for new entrants. The key the key problems, and a
lot of this comes out in the Communist Commissions Lays report.
It is that the wholesale side of the industry has
been completely tied up by the retailers. So that's why
you see your corner owner dropping down back and save
instead of them instead of buying through the conventional wholesale system,
(02:11):
so they're paying retail prices and then having to put
a markup on that and hope to sustain a business.
It's stuff like that that has caused the problem, and
that's that's where we need to go back to the
market structure is wrong. There is what's known in the
trader's market failure. So it's only by getting it into
the cause of the problem, which is an industry which
(02:35):
yoused to have half a dozen really vibrant players genuinely
compete againgainst each other, and has over the years gone
down to two. We need to actually look at the
factors that caused that, of which the wholesale structure is
one and used for the resource for the Communis Comission
to break that up with some legislative backing.
Speaker 2 (02:55):
So if Nichola Willis was listening to this now, then
she could she could have a few more to do
things on her list, the wholesale thing being one. But
do you think there's room for legislating on the forced
sale of banked land.
Speaker 3 (03:08):
I think it's too late to do that, to be
quite honest, Tim, you know the damage was done at
the beginning. Anyone who's who knows the finance markets will
tell you that to get a new ental, to start
a new Zealand from scratch, you'd need well over one
hundred near stores on day one. I mean, Costo has
a bit of an aberration and they don't think we're
showing any appetite to expand much anyway. But for a
(03:31):
conventional US supermarket chain like Aldi to come in from Australia,
for example, they'd need one hundred and thirty hundred and
fifty sites within their first few weeks. They also need
access to the wholesale system, and you know that is
the big part of the problem here. I was really interested.
I see the outgoing boss of Ficks Peanut Butter in
(03:54):
the media during the week and he described the supermarkets
as being a mafia like cartel, and effectively that's what's happened,
you know, the concentration of power at the wholesale level
and such that the supermarkets can get away with what
they like and stop the suppliers from supplying anyone who
(04:14):
competes with them.
Speaker 2 (04:15):
If you were king for a few days, what would
you do?
Speaker 3 (04:20):
Oh you mean on supermarkets for more generally?
Speaker 2 (04:22):
Ah, well, well, on the supermarkets, on the things we've
just been discussing to improve the competitiveness and get that,
you know, yeah, what would you do?
Speaker 3 (04:32):
Look, I would take a leaf out of the book,
the playbook that was used for telecom, because you know,
the telecom situation twenty years ago had a lot of
similarity to what we have here. There was effectively one
or two companies controlling the whole market, and we were
paying way, way, way over the repair price for our phone,
(04:52):
and we had the whole range of measures that came
in to break down their power and stop them up.
So what I would do if I was king, I'd
be really brave. I would pass the legislation that would
force the exit listing operators in the industry to split
their wholesale from their retail operations, so that we had
an independent wholesale segment, different boards, different people, you know,
(05:16):
under the Commerce Act, not allowed to collude with each other.
And then, of course the first thing they would do
is be very happy to supply groceries to any new
influent that came along, you know, the existing like night
and day.
Speaker 2 (05:29):
Because as you say this, Ernie, it all makes sense.
It seems like common sense. And I sort of wonder,
why hasn't this been done till now? I mean, sorry,
it hasn't been done yet. Why hasn't it been done?
Speaker 3 (05:42):
It's called politics, and it's called lobbying. So on the
one hand, you know, you've got politicians who are you know,
we've got a lot of very right wing left libertarian
type views in Parliament these days, who take the view
that the property rights of the existing owners should prevail
(06:02):
over the rights of the consumers to buy at fair prices.
So there is a political purdle there. The second one
is is the complicated process. It would be litigious, There
would be a risk of the food markets tying the
government up, and knots in the court system and whatever.
But you know, none of those things are any worse
(06:24):
than the problem that confronted to New Zealand and the
telecom days. That one, and we can win this one,
but we've got to have the political will. And the
other arm of that is the lobbying and the intensity
with which these people get to the politicians, and you know,
doubt in everyone's mind obfuscate with different stories and explanations
(06:46):
and so on.
Speaker 2 (06:47):
Do you think that Nikola Willis herself is being inhabited
or do you think that she is part of the
problem politically in terms of just the politics you've outlined.
Speaker 3 (07:01):
I don't know, but it's a very good question. You know, Intuitively,
I think she's a decent person. I think she's one
of the politicians we have who is a little bit
in touch with people who are not necessarily in the
upper echelons didn't come wise. I think she understands the
New Zealand society and the community better than some of
the others do. But on the other hand, I feel
(07:25):
that she continues to steer the debate in the wrong
direction with this continual coming back to if we only
fix the resource management at all, will be well, you
know it's not like that. That's not going to happen.
Speaker 2 (07:39):
Do you think how much difference are we talking that
it could make? Because I mentioned I alluded to briefly
the piece by Liam down where he said it's not
just a supermarket problem. He said, we're feeling it because
we're suffering from low wages. Have you got to take
on that.
Speaker 3 (07:52):
Yeah, I agree with Liam Danel mat part that yes,
we do have an issue with low wages in this
country and that's as much a political problem as anything else.
But that's not a reason to not the rest of
the supermarket issue. It clearly is an issue. You know,
the Communist Commission and the latest report found that in
(08:13):
twenty twenty four there was a stabilization of supermarket prices,
but since the beginning of this year they've started going
up again. I mean the Communist Commission and comment to
we will talk about butter, but Commy's Commission made the
observation that a block of butter now costs you nearly
twice what it did at the beginning of last year.
You know, think about that we're a top butter producing country.
(08:39):
There is no transport factor in well transport.
Speaker 2 (08:45):
Yes, that is the thing I was going to ask you,
because there's it's sort of like an I don't know
if it's a been metha urban truth that people say
that we often pay more for local products in New
Zealand than consumers pay overseas. But I mean you've alluded
to you know, of course there are different fewer costs
in getting the product to market. Here are we paying
more than overseas people.
Speaker 3 (09:06):
We're paying a lot more than we should. I have
no doubt about that, none at all. It's very difficult
to make definitive statements. I mean, for example, we have
gest which is hired by international standards, but other companies
have various forms of sales tax and whatever. But you know,
I placed a bit of faith in the Communists Commission,
and they clearly believe that we're paying considerably too much
(09:29):
for groceries. Now. One of the figures in their latest
report the promotional money that floats around between the suppliers
and the supermarkets, which in the form of specials and
promotions and merchandising, tees and whatever five billion a year.
Five billion. Now that's you know, that's about a thousand
(09:50):
dollars per citizens. And there's all that money floating around,
and specially now the super markets used that for large
numbers of products that change price week by week. So
you go in this week and it's eight dollars forty,
you come in next week and at ten dollars eighty,
and then the third week gets back to the original
price again. It Dixon is deliberately used to confuse the consumer.
(10:16):
You know, you tend you assume that because you've got
a decent deal on it this week, and it'll be the
same next one. Had if we had a choice of
supermarket at least one of them, the competitive reasons were
going on what they call every day low pricing, where
the consumer knows they're going to get a fair price
whenever they go into shop. It didn't have to spend
(10:38):
an hour and a half on the internet try to
workout is the best place to get the course. Plakes
on Plans.
Speaker 2 (10:43):
Say, I did some talkback on this a few days ago,
and people sort of greeted it luke warmly as an
announcement and another announcement that wasn't going to mean much.
But the thing that stood out to me was that
the two giants in the supermarket business they seem to
like the announcement too, and I thought that that was
a sign that it wasn't really very much. What was
your reaction to that.
Speaker 3 (11:04):
I couldn't disagree with you. I mean, my observation would
be that Parliament these days has stopped being an action
factory and becoming announced factory. And that's not just in supermarkets,
but just the way the politicians seem to work at present.
So my eyes tend to roll when I hear it's
going to be an announcement about something one of than
just old fiscate. You know, they divert the issue, and
(11:27):
that's clearly what's happening on the supermarket one. Obviously that
the industry itself has got the best of interest in
trying to divert the argument away from the real issue.
But that real issue is the wholesale retail, combination of
wholesale and retail, and you know, the concentration of ownership
(11:47):
and effectively two hands.
Speaker 2 (11:50):
Do people like you have a voice in this when
I mean, you've got to voice it, obviously because we're
having a chat with you. But do you still have
a Do you get sought out by politicians to seek
your advice and opinions, because I'd be sending you straight
up to the beive.
Speaker 3 (12:05):
Well, I'm far too old to be in this stuff,
and I'm I thought sometimes why I am, But I'm
in the interesting position back in You know, I've been
a sort of a business advocate for most of my career,
and back in the nineteen eighties I worked for several
years in the food and grocery industry, and much more
recently I was heavily involved in the breakup of Telecom.
(12:25):
So you know, I've got a personal land of professional
interest in this stuff, and I guess I feel a
little bit of a responsibility to contribute to the public debate.
But you know, there's a lot of people saying these things.
You know, you listen to a lot of the grocery suppliers,
like as I said, the chat from picts the other day,
(12:46):
people like Sarah Ball who ran Soupy until that them
that sadly closed down. You know, there are people who
are prepared to be honest about people in the industry,
who are prepared to be honest about the state that
it's in. But all I can hope is that the
politicians will actually focus back on the real issue here,
which is market failure, the failure of market structures to
(13:09):
deliver what we need from what we have. And they
either need to compulsorily split the wholesale from the retail
arms of the industry, which is how it once was.
All they need to force the divestment of some of
the existing brands, for example, divest New World away from
back and Sable, or Choice away from Coundown. Let's solve
(13:32):
the right problem, not the wrong one.
Speaker 2 (13:34):
Well, Ernie, thank you so much for your time. There's
so much for us to sing our teeth into that.
But I really appreciate your time. And you know, despite
the fact that you know you're retired now from that
from that role. I do hope Nichola, maybe that catches
up here for a cup of coffee. That'll be great. Well,
Willy hear shout cheers, Ernie. Thanks, that's Erny Newman. He's
(13:57):
former CEO of the Food and Gracery Council.
Speaker 1 (14:00):
For more from the Weekend Collective, listen live to news
talksz'd be weekends from three, or follow the podcast on
iHeartRadio
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Football’s funniest family duo — Jason Kelce of the Philadelphia Eagles and Travis Kelce of the Kansas City Chiefs — team up to provide next-level access to life in the league as it unfolds. The two brothers and Super Bowl champions drop weekly insights about the weekly slate of games and share their INSIDE perspectives on trending NFL news and sports headlines. They also endlessly rag on each other as brothers do, chat the latest in pop culture and welcome some very popular and well-known friends to chat with them. Check out new episodes every Wednesday. Follow New Heights on the Wondery App, YouTube or wherever you get your podcasts. You can listen to new episodes early and ad-free, and get exclusive content on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. And join our new membership for a unique fan experience by going to the New Heights YouTube channel now!
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