Would breaking up Foodstuffs cut your grocery bill?
Foodstuffs has released a review by HoustonKemp that says the numbers behind National's plan to split it up are "economically implausible".
The review was paid for by Foodstuffs as an early check on work by Sense Partners about changing the grocery sector, according to RNZ. Sense Partners wrote the money case for National's plan. HoustonKemp argues the other side.
Sense Partners estimated prices would be 3.5 percent lower on average in the first year after a split. It put the total gain for the country at $2.9 billion over 20 years, after costs are taken off. It said households would save between $200 and $1320 a year by 2035, depending on income and family type.
Earlier reporting put the same result in smaller terms. Sense Partners' work suggested the benefits of splitting Foodstuffs would be about 26 percent larger than the costs over 20 years, according to the New Zealand Herald.
HoustonKemp founding partner Greg Houston said the results looked "too good to be true" and would leave supermarkets losing money over 20 years. His main point is about profit.
The review said supermarkets now keep 2.3 cents as profit from each dollar of sales. Sense Partners modelled a drop in profit worth 3.5 cents in each dollar. So the review says the plan asks supermarkets to give up more profit than they make. That gap lasts for 20 years in the model.
The review also questioned two starting points. HoustonKemp said Sense Partners did not check its ideas about higher running costs with people who run supermarkets. It said Sense Partners assumed Foodstuffs shops do not compete with each other, which HoustonKemp said had no basis.
Sense Partners' work was also checked. Former UK Competition Commission chief economist John Davies reviewed it and called it "impressive".
Contingent legislation and rival policies
National wants to tell the Commerce Commission, the body that checks competition, to study whether separating Pak'nSave from New World and Four Square would help shoppers. It would only pass a law to split them if the study says yes. The study would take six months.
Foodstuffs said little at first. On 17 September 2026, it said it needed more time to look at National's split plan before commenting in detail, according to Inside FMCG. On 18 September 2026, it asked National to show its workings on costs, risks and savings from splitting Pak'nSave from New World and Four Square, according to 1News. The HoustonKemp review is the full reply to that request.
Other parties in Parliament would not wait for the study. New Zealand First wants to separate Pak'nSave from New World and Four Square straight away. Labour would make Foodstuffs and Woolworths run their wholesale businesses, the part that supplies food to shops, apart from their supermarkets. The Greens would make Foodstuffs and Woolworths sell shops to set up a state-owned KiwiMart.
Foodstuffs North Island has said in the past its decisions on what to stock are not based on profit alone but on supply chain advantage, getting goods cheaply and reliably, according to Foodstuffs. That statement is from 2022 and is separate from the split debate. Foodstuffs works a bit like a bulk-buying group for its store owners.
The broader context here is an election argument fought with consultants as well as politicians. National points to the Commission and Sense Partners. Foodstuffs points to HoustonKemp. For officials, the key question is which starting points the Commission would accept.
Looking at what this means for making a law, the six-month wait matters. Even with a study first, MPs would still need to write a law that says what separation means, who gets the warehouses and trucks, and that can stand up in court. NZ First would skip the study. Labour and the Greens would use business law in a different way, to separate wholesale from shops or force sales to a new shop chain. Each option has a different test for showing shoppers gain.
In my view, the HoustonKemp review makes the next argument clearer without ending it. The fight is now about three points: the 2.3 percent profit against the 3.5 percent drop, whether Foodstuffs shops compete, and whether higher costs were checked with shops. A group of MPs looking at a law, and the Commission if asked, can test those points. The debate is likely to move from the $2.9 billion figure to whether those starting points hold.
