New Zealand to unveil new rules for international supermarket investors

Acting Prime Minister David Seymour is set to reveal new guidelines concerning international investors in New Zealand's supermarket sector today. Seymour will host a press conference at 3:30 p.m., stepping in for Prime Minister Christopher Luxon, who is currently overseas.

The government has consistently stated its intention to boost competition within the grocery market to combat high food prices. However, progress in this area has been notably slow. A June report by the Commerce Commission indicated no significant improvement in competition within the highly concentrated grocery sector, despite several regulatory changes implemented in recent years.

The duopoly supermarkets, Woolworths and Foodstuffs (comprising both North Island and South Island entities), continue to dominate the market, holding an 82% share. The report highlighted that their profit margins have remained largely stable, suggesting that competitive pressure has not increased meaningfully. This stability in margins is contrary to expectations in a market experiencing heightened competition, where downward pressure on margins would typically be anticipated.

While Foodstuffs North Island and Woolworths New Zealand saw slight decreases in their margins, Foodstuffs South Island's margins actually rose across both fresh and non-fresh categories. Both Foodstuffs entities and Woolworths New Zealand continue to operate at the higher end of international profitability benchmarks, according to the report.

These findings come despite regulatory reforms introduced after a 2022 market study identified muted competition and seemingly high profits for the duopoly. Previous changes included banning exclusive lease arrangements and land covenants that hindered competitors, introducing a grocery supply code, mandating wholesale divisions to open to external customers, and reforming planning rules for new supermarket construction.