New Zealand supermarket giants should put their money where their mouth is
I do not suffer interruptions to my doom scrolling easily. But, when the interruption comes in the form of an advert fronted by “Kiwi icon” Anika Moa, I can definitely spare an extra 60 seconds. Anika Moa is as quintessentially Kiwi as exorbitant supermarket prices: two staples of the modern Kiwi culture that combined in the form of an advert for New World’s Family2Family Foodbank appeal.
Before I continue, I must make two disclaimers. Firstly, this is in no way meant to be an admonishment of Anika Moa. She seems like a genuinely good person, who made a reasonable decision to use her platform to promote charity work. This is also not a condemnation of charity work. But, being a responsible consumer of media requires that advertisements (even those for charity) be critically analysed.
Take this Family2Family foodbank appeal advertisement for example; on the surface, the campaign seems commendable. For $20, New World customers can donate a bag of food items to local food banks. New World will then match the donation value up to a maximum of $250,000. The appeal is to help the New Zealanders that “are struggling to put food on the table, especially through winter.” The façade fails when you ask one simple question: why are so many New Zealanders struggling to put food on the table?
You do not need to look further than trusty old StatsNZ to find an answer. According to their Food Price Index, food prices increased 12.1 percent in the 12 months ending May 2023. That is what makes a campaign like the Family2Family campaign so deceitful: it neglects the part that supermarkets play in making it a struggle to put food on the table. When you consider that New World’s parent company (the combined Foodstuffs Co-Operative) reported nearly 52 million dollars in profit last year, campaigns like the Family2Family campaign seem like a disingenuous tactic to cover up corporate greed. New World’s donation of “up to $250,000” is a lot less charitable when presented as a donation of “up to 0.5%” of their parent companies’ yearly profit.
Foodstuffs also own the Pak ‘n’ Save and Four-Square brands, meaning that the company owns two of New Zealand’s biggest grocery retailers. However, it would be unfair to place the blame for supermarket pricing purely on their shoulders. There is not just one villain in this sordid affair; there are two! Another major player is the Australian supermarket giant Woolworths, who own Countdown. According to 1News, these two companies have a combined market share of 90%. A market study conducted by the Commerce Commission found that the duopoly made a combined $430 million in profit last year, during a cost-of-living crisis.
It gets even more outrageous with announcements like Woolworths’ $400 million dollar rebrand. Most of the profit that allows these corporations to undertake projects like the rebrand came from price increases across the grocery aisles. As The Guardian reported in April, the price of eggs alone increased 63%, while fruit and vegetable prices increased 22%. Let’s be real: we know that things are bad when a British media organisation like The Guardian reports on New Zealand topics other than Jacinda Ardern or Hobbits.
Surely, there must be an explanation for these extortionate price increases. On their website, Foodstuffs North Island tries its best to provide answers to our most burning questions. The company cites inflation and rises in supplier prices as reasons for rising costs, as well as claiming widespread misunderstanding around their profit margins. These all seem like valid reasons until you remember that Foodstuffs is part of a duopoly making nearly half a billion in profits. However, in the interest of fairness, I will address some of their reasonings.
On the 13th of April 2023 Newshub’s YouTube channel posted a video titled; ‘Ripped off’: NZ grocery suppliers say supermarket consumers are getting ‘screwed’. In this video, Newshub revealed that they had spoken to supermarket suppliers who were fed up with what they believed were excessively high profit margins. The supplier’s request for anonymity because of fear of retaliation gives the video a rather sinister feeling;, which only gets worse when it is revealed that supermarkets are making up to 55% gross profit on a product (before wages and GST). This amount is inconsistent with the gross profit Foodstuffs reported on its website of 32%, marking a 23% difference.
The suppliers interviewed also discussed the refusal of supermarket chains to pay more for products despite the cost of inflation on producers. And, according to an article published by the Spinoff in July, “supermarkets don’t just pay suppliers, suppliers pay supermarkets, too. For many things. Like promotions. And those exchanges aren’t included in the index or [in the data] provided by Foodstuffs.” All of this evidence refutes the claims made around misunderstandings or extra supply cost, not to mention the $430 million-dollars-in-profit-shaped elephant in the room.
The problem is, our society often excuses greed as just being “great capitalism”. However, in this case, that excuse cannot be made. For capitalism to function, there must be competition, and with 90% of the market being shared by a duopoly, there is practically no competition in the supermarket sector. To excuse the duopoly’s hold over the sector as “great capitalism” would also mean forgetting the most crucial problem: cheaper food prices are not something that we want, they’re something that we need.
Expensive food may be an inconvenience for some, but for others, it has permeating effects. Aside from the obvious benefits to physical health, eating healthy can positively impact cognitive abilities and mental health as well. Both factors contribute to academic performance; and, for many students, high fruit and vegetable prices mean that the choice to eat healthily is a luxury, limiting their ability to achieve their academic potential. Health and academic performance are not the only areas in which high food pricing puts students at risk.
To contextualise this, I spoke to an anonymous student at the University about their recent shoplifting habits. According to Foodstuffs, shoplifting was up 57% between February and April compared to last year. With food prices reaching all-time highs it becomes easier to understand why. The student I spoke to told me they would “be able to afford to eat properly without struggling” if they “stopped paying for [their] phone bill, power and water.” They do not enjoy stealing, but, when asked what forced their hand, they revealed that the cost of fruit and vegetables was the ultimate kicker, as stealing has now become “their only way to afford eating healthy.”
I must formally apologise to those of you who made it this far. We have trawled through the darkest statistically dense oceans and witnessed the human impact of profit-driven supermarkets to reach this point. However, this is where I pat you softly on the back while trying to convince you that it might just turn out okay.
The good news is that the spotlight has been placed firmly on the supermarket sector. The Commerce Commission’s 2022 Market Study resulted in the appointment of a new Grocery commissioner, Pierre Van Heerden. Appointed in July, Mr Van Heerden has 25 years of experience in the Grocery and Supply industry, and in an interview on 95bFM’s The Wire, said he is “focusing on levelling the playing fields” in the grocery sector. Time will tell whether his appointment was effective or an act of bureaucratic bullshit, but I am oddly optimistic.
We have already seen some changes in new unit pricing regulations that were created to help consumers better compare value for money. It appears the New Zealand government has finally said enough is enough. If the supermarket duopoly cannot learn to play nicely with capitalism, then it is time for some good old-fashioned market regulation.
If supermarket giants want to present themselves as being a part of Aotearoa’s communities, then they have a responsibility to provide food at fair prices. Otherwise, they are worse than wolves in sheep’s clothing: they’re wolves in Ugg boots and a knockoff All Blacks jersey; tacky and deceitful.
