Supermarket Excess Profit Petition

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#2916614 20-May-2022 22:04

Lias:
Geektastic:

I wonder why they do not export pork?

I would assume because our domestic demand vastly outstrips domestic supply.. I've heard something like 80-90% of our pork is imported.

Doesn’t that suggest we need more pig farmers?

Geektastic

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#2916615 20-May-2022 22:07

gzt:
Lias: I could be wrong but didn't the supermarkets both say they were going to do that already?

Maybe. Not that I know of. There is 20+ years of this strategy in NZ. I'd be surprised if all that landbanking and covenanting went away overnight voluntarily. Legislation of this nature was recommended by the commerce commission.

I’d guess the legislation will prevent future occurrences.

Taking away existing rights would possibly lead to claims for compensation.

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#2916617 20-May-2022 22:14

Behodar:

That's the essence of it. There's also a quote from an 'expert' complaining that it's too little, too late, ...

Bernard Hickey agrees with the quoted part. I think, he said as much on 19th May.

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mattwnz

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#2916629 20-May-2022 23:21

They need to make changes now, and potentially some emergency temporary changes in the interim. But the question is what is going to bring in the best competition to the market.

Handle9

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#2916632 21-May-2022 03:20

Geektastic:
Dratsab:
International wholesale prices affect the local price. Fonterra probably regard it as a bit of a PITA to supply the local market when they could much more easily just bulk ship everything offshore.

The international market is used to justify local meat prices as well even though, as a rule, export quality meat is not fed into the local chain.

Yes. Why would we want to eat the good stuff? 😤

It’s really quite good.

Speedy885

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#2916970 21-May-2022 21:45

Behodar:
gzt: Paywalled, but I can see that much : )

That's the essence of it. There's also a quote from an 'expert' complaining that it's too little, too late, and implying that it's therefore not worth doing.

Definitely too little too late. Something should have been done years ago but im sure a few backhanders to certain people ensured they could carry on as they pleased.

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Lias

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#2916980 21-May-2022 22:28

gzt:
Maybe. Not that I know of. There is 20+ years of this strategy in NZ. I'd be surprised if all that landbanking and covenanting went away overnight voluntarily. Legislation of this nature was recommended by the commerce commission.

I knew I wasn't going mad:

https://www.stuff.co.nz/business/126376359/foodstuffs-says-food-prices-not-high-concedes-on-covenants-in-reply-to-market-study

So Foodstuffs at least agreed to voluntarily do this before the final report came out.

Also found this page which seems relevant:

https://www.foodstuffs.co.nz/news-room/fsni-fact-checker

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#2918154 24-May-2022 21:00

Geektastic: Doesn’t that suggest we need more pig farmers?

I've heard well more than enough about pig farmer lately...

gzt

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#2918179 24-May-2022 21:55

Lias: Also found this page which seems relevant:

https://www.foodstuffs.co.nz/news-room/fsni-fact-checker

we have already released covenants from 78 out of 135 titles. So far 58% of all affected titles have had covenants removed and the remaining covenants are registered against land that we no longer own – we are approaching the owner of each parcel of land to remove these where needed.

Still a few to go aye. A voluntary approach was never going to cut it imo because it would run the risk of a competitor entering the market and doing exactly the same thing or something sneakily similar.

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#2918187 24-May-2022 22:06

My bold:

Beehive: The Commerce (Grocery Sector Covenants) Amendment Bill amends the Commerce Act 1986, banning restrictive covenants on land, and exclusive covenants on leases. It also makes existing covenants unenforceable.

Imo you will see a lot more competitive activity out of this. Particularly fruit and vege shops setting up next to supermarkets.

Behodar

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#2919684 28-May-2022 13:40

Sigh, supermarket playing games again. A 'real' brand product is $5. The supermarket home brand is $4 for the same size bottle. Upon comparing them, I found that the home brand is watered down to half strength, so you need to use twice as much, and therefore the home brand is really $8 for the same amount as the 'expensive' brand.

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#2919784 28-May-2022 18:01

Behodar:
Sigh, supermarket playing games again. A 'real' brand product is $5. The supermarket home brand is $4 for the same size bottle. Upon comparing them, I found that the home brand is watered down to half strength, so you need to use twice as much, and therefore the home brand is really $8 for the same amount as the 'expensive' brand.

It's on a par with 800g packs of frozen veges being priced the same as 1kg packs - hoping the customer won't notice...

SepticSceptic

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#2919878 28-May-2022 22:42

Yeah, it's not always price per 100gm or whatever.
Lot of the home brand style equivalents have more water, fillers, etc to make it cheaper.

A certain off brand bleach is 2% HCl. Normal household bleach is 4% or better.

Similar with items such as relish. More water and tapioca thickner as compared to on brand items.

Bah.

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#2919895 29-May-2022 08:21

SepticSceptic: Yeah, it's not always price per 100gm or whatever.
Lot of the home brand style equivalents have more water, fillers, etc to make it cheaper.

A certain off brand bleach is 2% HCl. Normal household bleach is 4% or better.

Similar with items such as relish. More water and tapioca thickner as compared to on brand items.

Bah.

In a previous life I worked for a company with a Butchery attached client in Queenstown would only take Mince at a set price so to make it work butcher would add litres of water to Bull beef as it absorbed the most water.

Was always a standing joke if mince was on special were you buying it by the Kilo or by the Litre.

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#2920465 30-May-2022 16:07

Press release:

The Government has put supermarkets on notice, and the message is clear: change at pace to increase competition and be prepared for regulation, Minister of Commerce and Consumer Affairs, David Clark announced today.

“The Government and New Zealanders have been very clear that the supermarket industry doesn’t work. It’s not competitive and shoppers aren’t getting a fair deal. The duopoly needs to change, and we are preparing the necessary legislation to do that,” David Clark said.

It comes as part of the Government’s formal response to the Commerce Commission’s market study into New Zealand supermarkets. The report found supermarkets earn $1 million a day in excess profits, straight from the pockets of Kiwi consumers.

The Commission made 14 recommendations including introducing a mandatory code of conduct to establishing an industry regulator and ensuring loyalty programmes are easy to understand and transparent. The Government has accepted 12 of the recommendations and is taking stronger action on the other two.

“The two recommendations not accepted relate to implementing a voluntary wholesale access regime and to a review of competition in three years. These issues can’t be kicked down the road. We need to address the underlying drivers of the lack of competition now.

“I spoke with both supermarket companies this afternoon to make this very clear. They know what is expected from them and the length of time we are prepared to give them to change before regulation kicks in.

“Given the pressure New Zealanders are under due to global inflation and cost of living increases, we can't afford to wait three years. Budget 2022 delivered a cost of living payment for about 2.1 million Kiwis to help with the impact of rising prices and fixing our supermarket sector is another action the Government can take.

“Our supermarkets know they’re in the spotlight, and we’ve recently seen some posturing around price rollbacks. However, it doesn’t fix the systemic problem at large – which is a lack of genuine competition in the sector.

“Alongside the retail stores, supermarkets have wholesale arms. We are calling on the duopoly to open these up to would-be competitors, at a fair price. Do this knowing the Government is determined to get a regulatory backstop finalised by the end of the year.

“If supermarkets do not strike good-faith wholesale deals with their competitors – our regulatory measures will make it happen for them. We are not afraid to unlock the stockroom door to ensure a competitive market.

“We are taking these actions because if competitors don’t have proper access to wholesale goods, there’s no real incentive to enter the market. You can’t run supermarkets with empty shelves. And the New Zealand market clearly needs more competition.

“We are also looking at how to implement compulsory unit pricing on grocery products which will give shoppers the ability to better compare products. Plus, we’re getting ready to launch consultation on the code of conduct that retailers will have to adhere to.

“Whilst we work to establish an industry regulator the Commerce Commission will take on these responsibilities temporarily. Once established the ‘watchdog’ will help keep pressure on the grocery sector, by providing annual state-of-competition reviews to keep supermarkets honest, as opposed to the check-in after three years recommended by the Commission. It will also facilitate a resolution scheme to mediate disputes between suppliers and retailers.

“This work will sit alongside my Budget night legislation to ban supermarkets from using restrictive covenants on land, and leases to block competition from setting up shop in certain suburbs and shopping centres. This Bill is currently with select committee.

“It is important to get this right and I look forward to continuing to engage with the grocery industry as we move forward with this suite of changes through the Grocery Industry Competition Bill which I intend to introduce to the House later this year,” David Clark said.

MBIE is also undertaking further work around requiring major grocery retailers to divest some of their stores or retail banners. Obviously this is a longer term piece of work due to its complexity, David Clark said.

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