Ernie Newman: Independent grocery sector consultant says Government should be focused on breaking up the current grocery sector

It could be too little too late when it comes to encouraging a third supermarket to New Zealand. 

The Government's repeated the call that we need more competition - to pressure prices. 

It's laying out plans to challenge the incumbents, Foodstuffs and Woolworths - and remove regulations discouraging competition. 

Former pre cursor to the Food and Grocery Council chief executive Ernie Newman told Francesca Rudkin the time has past and the focus should be on breaking up the existing sector. 

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Episode Transcript

Speaker 1 (00:00):
The government has reiterated its plan to encourage a third
player into the grocery sector. They're open to proposals, with
lots of talk centering on an international entry to the market.
The plan is to remove regulations that discourage new supermarkets
and help new entrants access land. Former CEO of what
is now the Food and Grocery Council, Ernie Newman, joins me, Now,

(00:20):
thanks for your time this morning.

Speaker 2 (00:22):
Ernie, well impressive.

Speaker 1 (00:24):
Do you think we will attract international players with these moves?

Speaker 2 (00:29):
Honestly, no, I think the time has passed. I think
the good thing is that nichol and Willison's all of
a sudden to put competition right at the top of
her priority live. But you know, we have enough supermarkets
in New Zealand anyway. The problem we have is the
concentration of ownership. So the correct solution to this at
this point of time is to break up what we have.

Speaker 1 (00:50):
Okay, So if the government is serious about creating competition,
they should be taking a look at the current industry.

Speaker 2 (00:56):
Absolutely, they need to dust off the falls from the
the breakup of telecom and go down that track. And
it can be done. There's plenty of you know, the
international precedent for that sort of thing when competition comes unstuck.
And we're welling to really past that point now.

Speaker 1 (01:11):
So what would they look like, Ernie, if you were
breaking up the drop we already have.

Speaker 2 (01:16):
Yeah, if you take if you take the food stuff's group,
for example, you know they've got pack and saved, they've
got New World, they've got four square. They're all different
what they call banot groups, and they present them as
though they're competitors, but everybody knows they're not. You know,
there's one one mister bigg at the head of all
is who decides, you know, what the price today of

(01:38):
potatoes will be at each of those into those stores.
What we need is genuine competition where they are, they're
completely independently own and they're dealing independently with customers and
with suppliers. So that's that's the best solute and it's
perfectly achievable.

Speaker 1 (01:55):
So for example, Ernie, if you had food stuff, you
turn them into three seven ts to have you knew World,
you pack and say in your four square and need
compete against each other.

Speaker 2 (02:02):
Yeah, I'd be slightly more ambitious and to them before
because there's a wholesale operation, and that needs to be
split out as well. So that's the ideal to go
four ways. But any step down that path, whether it's
just splitting out one of them or we're all three,
or including wholesale, any step in that direction, I think
it's going to be a lot more productive than hoping
that somehow a new entrant is going to turn up.

Speaker 1 (02:25):
And is there anything else that we can do? We
want great competition with what we already have. Is there
anything else that the government could be looking at?

Speaker 2 (02:32):
I really don't believe. So. I mean, they talk about,
you know, removing regulation and making it easier for a
new entrant. You know, we arguably have too many supermarkets already,
so why would a new entrant come? And again, it's
the kind of duopoly that we have sitting here just
about the impossible. We're just about an impenetrable market. They can
afford to wait for months or years to basically burn

(02:56):
up a new entrant simply with a price war, So
that won't work. It is the breakup that is the
way to go on this.

Speaker 1 (03:04):
So, Annie, why do you think the talk is centering
around international beds rather than looking at what we can
you know already have here.

Speaker 2 (03:12):
I think because perhaps the government is a bit scared,
particularly with the influence of the zand of the ACT Party. Sorry,
I think you know they're worried about criticism that you know,
they're in fearing in the in the role of business
and whatever. But I don't believe that holds water. You know,

(03:33):
you get to a point where competition is broken too,
to the stage that that is the only action you
can take.

Speaker 1 (03:39):
Do you think there are genuine proposals from a third party?

Speaker 2 (03:43):
I'd love to think so. I wouldn't be surprised. The
question is whether it's a big enough scale to make
a difference to the market and to survive long term.

Speaker 1 (03:54):
Annie Newman, really appreciate your time this morning. Thank you
so much for that. That was former CEO of what
is now the Mod and Grocery Council.

Speaker 2 (04:02):
For more from Early Edition with Ryan Bridge.

Speaker 1 (04:05):
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