Ernie Newman: Grocery commentator on supermarket mark-ups

The Commerce Commission's first annual grocery report shows New Zealand shoppers paid almost 20% margins on goods like bread, flour, and eggs. 

Supermarkets are blaming price increases on rising supplier charges and the general cost of doing business, but grocery commentator Ernie Newman says he doesn't believe the supermarket narrative. 

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
And which products do you reckon? Supermarkets are making the
most money on because According to the Commerce Commission's first
annual Grocery Reports, supermarkets had the biggest margins on everyday
items like bread, flour, eggs, with the margin on those
products close to twenty percent. Cleaning products, pasta, rice and
pet products were slightly better at over just over seventeen percent.
The smallest margins on baby products, confectiony and tobacco products.

(00:41):
Supermarkets appointing to the rising costs from supplies, but the
commercial but the ComCom should I say, says higher prices
have not been fully explained by higher costs for retailers
and Earning Newman, he's a spokesperson for Grocery Action Group.
Good morning, Good morning.

Speaker 3 (00:56):
I'm actually in independent commentator these days, but I've got
a lot of background of medium.

Speaker 2 (01:01):
Thanks for clarifying that. Were you surprised by the biggest
margins being on bread, flour and eggs?

Speaker 3 (01:08):
You know, yes and no in the firy sort of way.
They can take whatever margin they like on pretty much anything.
And yes, it does surprise me that those particular products
were singled out. But to me, the most important thing
is that what we're seeing is over a period of
several years, their profit margin is rising by close to

(01:28):
one percent a year. And that's so different to the
narratives they're trying to give us. Things are squeezed.

Speaker 2 (01:35):
Foodstuffs have said that their net profit attacks of shelf
price goods has averaged less than four cents per dollar.
That doesn't seem like a huge profit margin. Is there
something listening here?

Speaker 3 (01:47):
Absolutely? You can spin that those numbers anyway you like.
And you know, one thing they're not sure of is
pr people to find different ways of presenting the numbers.
I choose to believe the Communist Commission, and the Communist
Commission clearly has come out has said the markets in
the sector are well above what they think they should
be in a a normal competitive market and are increasing

(02:11):
year on year on year.

Speaker 2 (02:13):
Are you sorry?

Speaker 3 (02:15):
Carry I think the other The other thing is, of
course that a lot of key wes go overseas and
compare prices and supermarkets in other countries, and we are
paying well over the odds and including for a lot
of products that we ourselves are supposed to be experts
in making.

Speaker 2 (02:31):
Do you think the Comcom's going to ramp up enforcement action.
We've got those cases of the criminal charges against businesses
for the inaccurate pricing and specials. Are they building up
a head of steam here?

Speaker 3 (02:43):
The problem with the Communist Comission is that to do
anything really meaningful they need strong support from the government.
You know, they've come out with They've produced some very
high quality reports in this area and others. The Communist
Commissions are class act these days, and they come out
with very very well researched material. But what is needed
here is quite draconian action. You know, we have got

(03:04):
we have got market failure in our supermarket sector like
we had in metallic communitations market twenty years ago, where
there is far too much concentration in one or two
sets of hands, and that requires political will to actually
get them there deal with it. It requires some kind of
enforced breakup so that the market can go back to

(03:24):
operating in a competitive way.

Speaker 2 (03:26):
Excellent, Hey, Ernie, really appreciate your time. That's Ernie Newman.
He's an independent commentator now on grocery and supermarket issues.

Speaker 1 (03:34):
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