National proposes splitting Foodstuffs to cut prices
National has proposed splitting Foodstuffs in two in a bid to drive down grocery prices.
The proposal would require a Commerce Commission review to determine whether shoppers would be better off. Foodstuffs is made up of two co-operatives managing all New World, Pak'nSave and Four Square stores. Under National's plan, New Zealand would have three nationwide supermarket chains: Pak'nSave, New World/Four Square, and Woolworths RNZ.
That is the test. The Commission would assess the separation before any break-up proceeded. National has not framed it as an immediate divestment. It is a proposal conditional on a competition finding.
The numbers are specific. National's modelling estimated prices would be 3.5 percent lower after one year and 5 percent lower after six years with Foodstuffs split in two. Finance spokesperson Nicola Willis said splitting Foodstuffs could eventually save households up to $1320 a year RNZ.
Reaction has split along predictable lines. University of Auckland senior marketing lecturer Drew Franklin described the proposal as a "step in the right direction". Consumer chief executive Jon Duffy welcomed the idea of splitting Foodstuffs RNZ.
Business has pushed back. BusinessNZ director of advocacy Catherine Beard said the proposal was concerning and could undermine New Zealand's reputation for "regulatory stability, respect for property rights and predictable policy settings". She said it "sends a chilling signal to businesses that the government can break up businesses" and "sends the wrong signal to foreign investors looking to invest in New Zealand" RNZ.
The idea is not new in Parliament. NZ First is campaigning on splitting up Foodstuffs into two co-operatives, with New World and Four Square in one company and Pak'nSave in the other. The Greens want a government-owned supermarket. The Government has said Kiwi shoppers are being poorly served by a grocery market "effectively dominated by Foodstuffs and Woolworths" Beehive release.
Regulators have already traversed the ground. Economist Tim Hazeldine submitted to the Commerce Commission that the Foodstuffs Co-operative "should be split into two or more fully independent competitors in the New Zealand grocery products market". The Grocery Action Group submitted that allowing the Foodstuffs North Island and Foodstuffs South Island merger "would further concentrate power in an already densely concentrated market". The Commission published a 2024 Annual Grocery Report as a benchmark of the state of competition.
Ministers have also moved on entry rather than structure. In August 2025, New Zealand said it would introduce laws to speed up approval of new supermarkets Reuters. Willis said some respondents to a government-initiated feedback process on the grocery sector had argued for the break-up of Foodstuffs and Woolworths. Food prices remain politically sensitive. Food prices make up nearly 19 percent of the consumer price index, and Statistics New Zealand data showed food prices fell 0.4 percent in September 2025.
The broader context here is the choice between structural intervention and facilitated entry. A Commission-led test gives National a process defence against the property-rights critique, but it also hands the timetable and the definition of consumer benefit to an independent regulator. For readers in the Beehive and the Gallery, the detail to watch is not the headline saving. It is the terms of reference, the counterfactual the Commission is asked to apply, and whether separation means full ownership split or operational separation with transitional supply arrangements.
Looking at what this means for coalition politics, the overlap with NZ First matters more than the clash with BusinessNZ. Two parties now backing a Pak'nSave split from New World and Four Square narrows the negotiation space after the election. It also sharpens the contrast with Labour-leaning options around a state-backed entrant. The policy question will be enforceability. The political question will be who owns lower prices.
