Pieter de Wet: Woolworths Managing Director on what’s making New Zealand’s groceries so expensive

Woolworth’s says Kiwi shoppers are getting a good deal from supermarkets.

The supermarket giant’s blaming GST for New Zealand’s grocery prices rising higher than Australia and the UK.

They say food prices could rise as much as six percent if the government was to intervene.

Woolworths interim managing director Pieter de Wet talks to Heather du Plessis-Allan about the claims.

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Episode Transcript

Speaker 1 (00:00):
Now Walworths well, speaking of the supermarkets, Woolworths has hit
back over claims that supermarkets are charging us too much,
instead blaming the government for it. Now they've released a
paper today and they say it's the GST on the
groceries that make our groceries more expensive than over in
Australia and the UK and now. Peter de Wet is
the intro managing director of Walworth's New Zealand. Peter, Hello,
hei the okay, So if you take the GST off

(00:22):
and the comparable taxes around the world, are we cheaper?

Speaker 2 (00:26):
Absolutely. In the comparison we've done, which is to a
number of UK and Australian retailers, we end up being
about ten percent cheaper.

Speaker 1 (00:33):
What are you You're not just choosing things that are
going to make it like You're not You're not gerrymandering
the situation. Are you by choosing things that are cheaper
in New Zealand?

Speaker 2 (00:41):
No? Absolutely not. So we used the Choice shopping basket
and to give you a sense of what it did
to know, it's all the core core basics, things like milk, apples, garrets,
mince wheat, pigs, butter, toothbas shampoo, you know all the
core basics, so twiney real staple products.

Speaker 1 (00:56):
How do we end up cheaper that like that? Well,
this is going to confound anybody who's ever done any
shopping around the world.

Speaker 2 (01:03):
I think the reality there's customers. You know, this is
a comparison, but customers feel the pinch of having paid
a lot more for the groceries globally over the last
number of years. It's not only a New Zealand problem.
So I think the reality is if you if you
go and shop, it feels expensive. That's just the reality
of it.

Speaker 1 (01:23):
Okay, So is it a case of us having higher
taxes or is it a case of the countries you're
comparing us to us to having exemptions on their groceries.

Speaker 2 (01:35):
Well, the reality is they've got they've got a different
GSDY structure to us. So the bulk of the products
we've compared, about two thirds of them don't have GSD
on them. So it is a structural difference between the
three markets. And I just want to be clear, you know,
the reason we're pointing it out is not to say
GC issued or shouldn't be there. The only reason we're
pointing it out is because often we see comparisons out

(01:57):
in the media where people say we've so much more
expensive than these markets. But the reality is one's going
to compare apples of apples.

Speaker 1 (02:05):
Yeah, so what are the exemptions they have got but
we don't.

Speaker 2 (02:09):
So in both these countries. I'm not going to talk
through all the detail, but roughly, if I give you
a general assessment of it, fresh products in the main
are not are not covered under jest and neither are
like commodity grocery products.

Speaker 1 (02:24):
Okay, you've also made the point that if the government
was to intervene, it would push up the price, potentially
buy as much as six percent. But what would it
be that would cause that price rise?

Speaker 2 (02:34):
Sure, so I think that you know, from what we've
looked at the reality one of the challenges we've got it.
There's two big challenges in New Zealand. The one is
that we far away from everywhere, and the other one
is that we are small country, so scale is really important.
So if you take the existing retailers in the market,
if we were to let's just say, Louise twenty thirty
percent of our scale overnight, it would mean that our

(02:57):
costs are the relationship of our cost to total sales
we've changed dramatically overnight because of that loss of scale,
and therefore prices will by nature of that go up.

Speaker 1 (03:08):
Okay, Now, when I saw this this morning, Peter, my
first thought was that you guys are firing a warning
shot over the bow of the government who've used you
as their whipping boys. Is that what you're doing.

Speaker 2 (03:19):
That's definitely not what you're doing either. I think you know.
The reality of it is, we want the same thing
as the government. We feel the pane of our customers
every week, we all customers ourselves, and we want to
bring prices down. What we do want to make sure though,
is that through the idify process, which is actually a
really constructive process to date, is that we share factual
information as best as we can with the government for

(03:41):
them to make informed decisions. You know, if we can
get a better outcome for customers on price, that's a
great outcome. We just want to make sure that.

Speaker 1 (03:48):
Yeah, but I mean to be fair, Peter, if you
were going to share information with the government, you can
share information with the government. You've chosen to share it
with the rest of us, haven't you.

Speaker 2 (03:56):
Yeah, we shared it with the government first up, and
what you've shaid with the government is significantly more detailed
and we really hoping that we can work through it
with them. But to the reason we've shared it broader
is we want to make sure that customers know what
the facts are as well. Now that's not going to
make you know, we're also realistic about the fact that's
going to not make them feel better about what they

(04:16):
spend at the checkout next week, that's for sure, but
we do want them to know what the facts are.

Speaker 1 (04:22):
Peter, as always, it's really good to talk to you.
Thank you for your time. Mate. That's Peter de wet
will Worst New Zealand into a managing director.

Speaker 2 (04:28):
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