Pierre van Heerden: Grocery Commissioner on NZ having the fifth highest grocery prices in the developed world

Competition's lacking in the supermarket sector and Kiwis are struggling to put food on the table. 

The Commerce Commission's Annual Grocery Report's revealed our grocery prices are the fifth-highest in the developed world. 

It highlights the market isn't supportive of new players, and major supermarkets continue to wield power over smaller stores.

Grocery Commissioner Pierre van Heerden says extra competition is key to bringing prices down more.

"That's why we're so focused on using all the tools we have available to ensure that we do get competition going in the market for the long term." 

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Episode Transcript

Speaker 1 (00:00):
Now we've got the annual Grocery report out today. It
shows that we pay the fifth most in the world,
in the developed world, at least for groceries, and it
shows that food stuff's had a higher profit percentage than
international supermarkets like Walmart, Tesco and Sainsbury's. P Van Headon
is the Grocery commissioner.

Speaker 2 (00:17):
Hype here, good afternoon, ether, How is it that they.

Speaker 1 (00:20):
Are making more, at least in terms of profit percentage
than the likes of Walmart.

Speaker 2 (00:27):
Well, what the report shows is that the gross margins
have actually stabilized after years of increasing, so that at
least is a good sign that there is some progress.
But competition is needed in order to bring those margins
down further. And you know that's why we so focused
on using all the tools we have available to ensure

(00:51):
that we do get competition going in the market for
the long term.

Speaker 1 (00:55):
Okay, when you calculate that we pay the fifth highest
for groceries in the developed world, is it like full like?

Speaker 2 (01:01):
Like?

Speaker 1 (01:02):
Are we are we including? For example, somebody's pointed out
on the texts that alcohol is not included in Australia
because they cannot sell alcohol in the supermarkets. Are we
counting it as part of our purchase.

Speaker 2 (01:11):
Here. The OECD have got a basket that they compare
and those are the figures that we use. So I
believe it is apples for apples.

Speaker 1 (01:21):
So it's not about it's it is looking at if
you if you're buying your milk and your cheese and
your broccoli and your toast whatever, how much A costs
here versus how much A costs elsewhere.

Speaker 2 (01:32):
That's my understanding of those CE report yests.

Speaker 1 (01:34):
Now, peer, what are we going to do about this?

Speaker 2 (01:38):
Well? Here that when I look at the report, you know,
there's there's signs of progress, but there's still a long
way to go. Are no consumers are struggling out out there.
But we've got to remember that this regime was put
in place to ensure that we get long term competition
that's sustainable and also efficiency in the industry. I don't

(01:59):
have the tools to get short term results. It is
a long game, as I've said all along, and there's
no one silver bullet. You know, you've mentioned before the
different tools that we use. As Grocery Commissioner, I'm involved
in every one of those areas. So whether it's the
Commerce Act, Fair Trading Act or the Grocery Industry Competition

(02:21):
Act that we use to enforce things with. I'm involved
across all of those to ensure consistency and that we
have the focus on the whole industry. It's a twenty
eight billion dollar industry which hasn't changed for a long time.
But I'm seeing signs that there's some behavioral change happening.

Speaker 1 (02:41):
Yeah, is that going to be enough? Or do we are?
We actually relying quite heavily on whatever it is that
Nicola Willis announces in the next few weeks.

Speaker 2 (02:50):
Well, whatever the government is doing is in addition to
what we're doing. Our report will help inform the government
on what the current state is said last year, it
looks at this year, and it informs them of all
of that. And then they coming back where did they
take them away.

Speaker 1 (03:07):
Ahead of this big announcement that we're now all waiting for.
Has she come to you guys and ask for some
help with ideas.

Speaker 2 (03:14):
We meet with the Minister regularly as well as with
MB and provide them with insights and information from the industry,
But the policy basically sits with the government.

Speaker 1 (03:25):
What is the idea that you've told her would be
the best idea.

Speaker 2 (03:29):
Well, we wouldn't go into detail with that because we
basically meet confidentially with the minister has given what is
happening in the industry.

Speaker 1 (03:39):
Have you given? Have you given her ideas?

Speaker 2 (03:43):
We've spoken about where the industry is at at the
moment and what is required in order to get structural
change within the industry.

Speaker 1 (03:52):
How hard do you reckon she's going to go? I mean,
are we talking about significant stuff that's going to make
a real difference or are we just talking about tinkering here.

Speaker 2 (04:00):
Well, that's something that you'll need to ask the Minister
and the government about. You know, we very focused on
making sure we're doing everything in our power to use
every single tool we have to get change.

Speaker 1 (04:14):
If she just did tinkering, would that be sufficient?

Speaker 2 (04:18):
Well, again, you know, that's a decision that the government
of the day makes. I'm here to make sure that
whatever tools I've got to use them to the best effect.
And as I said in this report, we can see
some progress being made and that will help us inform
us where to focus on.

Speaker 1 (04:38):
As a result, I'm trying to get a handle of
kind of what it is, how big the problem is,
and how big we have to go to fix it, Like,
are we talking about a problem that is so big
that we need I don't know, some false divestment here
or some structural breakoup. Is that what we're dealing with?

Speaker 2 (04:56):
Well, I think you're aware that the problem is big.
Kiwis are struggling. We don't have enough competition in the market.
We are one of the countries in the world with
the least amount of competition in the superharer market industry,
and that is why some of these unique tools have
been brought in to try and ensure that we focus

(05:19):
on how do we get that change going and then
it's up to the policy makers.

Speaker 1 (05:24):
So big, big problem equals must have big a big solution,
basically a big fix to fix it. Now, do you
have any idea what she's going to announce?

Speaker 2 (05:34):
No, we haven't been taken into confidence on the government's announcements,
and you know that is something that they will determine
when they announced that.

Speaker 1 (05:43):
Interesting. Hey, peer, Thanks very much, Pervnhead and Grocery Commissioner.
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