The Grocery Action Group says nothing has changed for Kiwi shoppers amid rising food prices at supermarkets.
The Commerce Commission released its second Annual Grocery Report yesterday, which found that while some progress has been made, many of the issues already identified continue to stifle significant improvement in competition.
Speaking to Ryan Bridge on Herald NOW, Grocery Action Group chairwoman Sue Chetwin said Kiwis were seeing big increases at supermarkets again throughout 2025.
“Despite all of the new tools that the Commerce Commission have been given since their first market study, nothing has really changed for Kiwi shoppers.
“There’s still very unhealthy competition or none ... we’re still paying very high prices ... It’s not a very good scene for the Kiwi shopper in terms of food and groceries.”
The commission’s report found New Zealanders paid 3% more for their groceries in 2023 than the OECD average.
“That puts us in the top five most expensive in the OECD,” Chetwin said.
But the report said 2023 prices were closer to the OECD average than previous years.
Kiwi shoppers were paying 9% above the OECD average for groceries in 2022, and 14% more in 2021.
However, prices for goods in the “milk, cheese, eggs” and “fruits, vegetables, potatoes” categories were significantly higher in New Zealand than the OECD average.
The report said it was a concern “that many of the goods in these two categories are produced and sold domestically”.
New Zealanders spent more than $27 billion at supermarkets and grocery stores in the year to June 30, 2024, up 5.3% compared with the previous 12 months.
Grocery Commissioner Pierre van Heerden said change in an industry this large and entrenched will take time and a deliberate, co-ordinated effort.
“In 2024, retail grocery prices appeared to have stabilised after years of significant growth, which was reflected in a slowing of the major supermarkets’ gross margin growth, however, grocery prices remain higher than the OECD average,” van Heerden said.
“Recent data shows retail prices increasing again in 2025 ... there is more work to be done to improve competition.”
The report also found barriers to entry for new competitors remain, while the major supermarket chains (run by Foodstuffs and Woolworths) continue to wield their power over smaller suppliers.
In addition, the report highlighted geographical inequities in the two major supermarket chains’ dominance.
In Auckland, the major supermarkets hold 71% of the market compared to 88% in the rest of New Zealand, the report said.
“Consumers in Auckland and other main cities have a range of options, but consumers in smaller towns and rural areas typically have minimal to no choice within their locality, with some stores in small towns functioning as a localised monopoly,” van Heerden said.
Foodstuffs North Island CEO Chris Quin said the co-op was making solid progress across key areas of regulatory reform.
“We back the intent of the still relatively new regulatory framework to drive competition, efficiency and better outcomes for New Zealand consumers,” Quin said.
“We’ve taken that responsibility seriously from day one and have put in place a broad programme of work to meet our obligations and make the system work well for customers, suppliers and retailers alike.
“Much of this work has been under way for some time and it’s being delivered alongside our day-to-day focus on serving millions of customers a week, investing in new stores and technology and keeping our supply chain efficient and resilient.”
Quin welcomed the commission’s findings that competition in the grocery sector is more developed in areas with higher population density.
“We’re pleased the commission has recognised that competition is strongest where demand and population support it, and that concerns about land holdings are not borne out by the evidence,” he said.
“We’re focused on opening new stores and providing new jobs in small, remote and growing communities where the need is clear.”
Foodstuffs South Island chief executive Mary Devine said the co-op’s focus remained delivering for customers in all corners of the South Island and building enduring and trusted supplier relationships.
“The South Island presents unique logistical challenges due to its low population density – approximately eight people per square kilometre.
“Yes, we have supermarkets in cities and major towns, but we also have 37 stores that serve communities of less than 5000 people [and] 56 that serve communities of under 10,000 people and that’s a responsibility we take seriously.”
The Annual Grocery Report said 90% of Kiwis are within a 10-minute drive from a major supermarkets.
Woolworths has been approached for comment.