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Saturday 21 May 2022

Countdown rejects Consumer NZ supermarkets’ “super profits” petition claim

10th May 2022 By Staff Reporter | | @foodtickernz

Countdown has countered the launch of a new Consumer New Zealand petition calling on the government to shake-up the grocery sector, by rejecting claims of so-called “super profits” in the sector.

In a statement the New Zealand supermarket chain’s director of corporate affairs, safety and sustainability, Kiri Hannifin, said its net profit was 2.4c in the dollar, after tax and supplier costs, and the idea it was responsible for food price inflation was “misleading”.

Kiri Hannifin

“We firmly disagree with the commentary around excessive profits,” Hannifin said. 

“The fact is that once we pay tax, our net profit is 2.4c in the dollar, or $2.40 on a $100 shop. It’s misleading to suggest that we have control over price inflation and the kind of cost increases all of us are facing at the moment. 

“We pay suppliers 63c in the dollar, and in New Zealand, 15% is added on top of all food.”

In addition, the Woolworths-controlled group said it publicly supported the Commerce Commission’s recommendations from its market study and we are actively working on these, including the recommendation around voluntarily opening up wholesale supply – something the petition addressed.

“While wholesale isn’t something we are currently set up to do and it’s extremely complex, we are well aware of the commission’s expectations,” Countdown said.

Consumer NZ this morning launched a petition calling on the government to act against what it describes as “super profits” being made by New Zealand’s two major supermarket groups, Foodstuffs and Woolworths.

The consumer affairs organisation wants the government to go further than the recent Commerce Commission grocery market report findings, which stopped short of breaking up the duopoly, despite findings that competition in the highly concentrated market was not working well for consumers.

“Every day the supermarkets are taking more than $1m in excess profits from our collective back pockets,” Consumer NZ chief executive Jon Duffy said.

“These profits are twice what they should be. We need more competition to drive down prices and give New Zealanders a fairer price at the checkout.

“No-one is going to start up a competing supermarket without reliable access to wholesale groceries, but currently the duopoly dominates access to wholesale supply.”

Duffy added that while the Commerce Commission had recommended the supermarkets consider supplying other retailers, “we think this is unrealistic to expect from an entrenched duopoly used to calling the shots – that is why we’re launching a petition”.

In an open letter to Commerce and Consumer Affairs Minister David Clark, Duffy recommended regulating access to wholesale supply to enable competitors to enter the market or setting up a state-owned wholesaler.

Consumer NZ is aiming to collect 200,000 signatures to lobby the government to go beyond the commission’s recommendations.

With more and more New Zealanders struggling with the rising cost of groceries, the major supermarkets’ excessive profits are “a slap in the face,” Consumer NZ’s petition website said.

“Excess profits mean you pay more than you should at the checkout.”

It added that the commission’s recommendations did not go far enough, and the country needs more competition to drive down prices and give consumers better choices.



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