A Government-commissioned cost-benefit analysis by Sense Partners found the Foodstuffs split could save households between $3.85 and $25.38 a week by 2035.
Foodstuffs has opposed the proposal.
“I felt physically sick at the thought our co-operative model and the businesses we’ve built could be under threat in this way,” Rotorua Pak’nSave owner Amanda Olsen told the Rotorua Daily Post.
She said Foodstuffs was made up of hundreds of independent business owners and relied on its scale to compete with larger transtasman rivals with greater buying power.
She said the proposal would mean currently shared services such as buying, distribution, logistics and technology would have to be duplicated, adding costs.
She said regional communities would be hit the hardest, with higher freight costs and more trucks.
“[At present] a truck coming to Rotorua may also service New World Kawerau, New World Matamata, and local Four Squares.
“Our network has 119 stores that serve communities of less than 5000 people. These stores in remote areas would be at risk of not being serviced without the scale our network provides.”
Olsen said Rotorua customers had plenty of alternatives, with three Woolworths stores, FreshChoice, Chemist Warehouse, The Warehouse, butchers, liquor retailers and a growing number of Asian supermarkets.
”We compete every day on price, range, service, and convenience.
“If the market wasn’t competitive, international grocery operators would already be lining up to enter New Zealand.”
Many factors influenced product prices, for example, overseas demand for red meat was putting pressure on local supply and pricing.
Olsen said the supermarket worked to “help customers stretch their grocery budgets” whenever possible by adjusting its range and promoting affordable alternatives.
That included more focus on frozen meat, particularly pork, as a more affordable protein lately, and in-season crops.
She did not believe Labour’s proposal to outlaw price-gouging by large companies with significant market power would help lower prices at the checkout, either.
Olsen said supermarkets were not price-gouging customers, and grocery retail was a highly regulated and competitive industry.
Olsen said she was not an economist but struggled to see how either party’s proposal would lower prices.
“To me, lower costs come from greater efficiency, not more duplication.”
Investment to improve the freight network and power infrastructure would also help, she said.
Pak’nSave Pāpāmoa owner-operator Rob McGregor told the Bay of Plenty Times he was in “disbelief” at National’s policy.
“It was an absolute shock. I honestly could not understand how anybody could think that reducing our scale is increasing our price-competitiveness; it just didn’t make any sense at all.”
Pak’nSave Pāpāmoa. Photo / NZME
He described the policy as “half-baked” and “incredibly disruptive” to more than 20,000 Foodstuffs employees.
“Those people right now don’t know what the heck this means. It’s completely uncertain, and certainty is one thing businesses need more than anything else.”
McGregor said he was “bewildered” and wanted more detail on how National envisaged pulling Foodstuffs apart.
“I’m just flabbergasted they’re thinking the best way to try and improve on the cost of living is to smack up the New Zealand grocery industry and leave international players alone.”
Foodstuffs North Island chairman and Pak’nSave Tauranga owner Dean Waddell told Newstalk ZB’s Mike Hosking Breakfast on Wednesday that despite apparent broad political support for the plan, Foodstuffs would “have to fight this”.
“Potentially unwinding our business makes us less competitive.”
Waddell said the market was heavily regulated and New Zealand already had “full oversight” of the industry.
He also downplayed a 2022 Commerce Commission report which said the supermarket industry made $1 million in excess profits every day, saying it was based on “assumptions and theory”.
National’s finance spokeswoman, Nicola Willis, held firm on Thursday that breaking up Foodstuffs was the best solution.
National finance spokeswoman Nicola Willis and leader Christopher Luxon announce the party’s policy to split up Foodstuffs. Photo / Mark Mitchell
On Newstalk ZB’s Mike Hosking Breakfast, Willis was asked about a page in the 2022 report that said regional pricing would get worse, and remain that way for about five years as Foodstuffs subsidised regional deliveries.
Willis said this was not true and the report said low prices would “flow to all regions”, including rural areas.
“The evidence is there would be much greater incentive for Pak’nSave to compete and set up potentially alternative formats and compete for those customers, and, in fact, some of those rural stores are more profitable than stores in urban areas.”
Annabel Reid is a multimedia journalist for the Bay of Plenty Times and the Rotorua Daily Post, based in Rotorua. Originally from Hawke’s Bay, she has a Bachelor of Communications from the University of Canterbury.
Kaitlyn Morrell is a journalist for the Bay of Plenty Times and Rotorua Daily Post. She has lived in the region for several years and studied journalism at Massey University.