Supplier Backs National Plan to Break Up Foodstuffs to Lift Competition

Food supplier Daniel Shields has backed the National Party proposal to break up Foodstuffs as one of the most efficient ways to bring more competition to grocery retail.

Shields, who owns Naked Kitchen, Barrys Bay Cheese and chilled distribution company Cool & Fresh, spoke to RNZ's Midday Report on 17 September.

He said New Zealand is probably one of the only countries where owning a supermarket can put someone on the rich list. In 2018, a group of Foodstuffs North Island owners entered the annual NBR Rich List, according to Stuff.

Shields said a break-up would force Pak'nSave and New World into competition with each other. Both banners sit inside Foodstuffs alongside Four Square.

His argument turned on buyer power — the ability of a large buyer to push down what it pays. He said Foodstuffs North Island moved to a centralised buying model in recent years, with one team buying for many stores. That scale put pressure on supplier prices. He alleged the group is able to demand high margins from suppliers but does not pass those savings to shoppers. None of the margin improvement was passed to consumers, he said. It was absorbed as profit.

That is contested ground. Foodstuffs states supplier costs make up 68 cents of every retail dollar on the shelf. It has reported holding grocery price increases below the Food Price Index for a fourth month in a row. In April 2026 it said the co-operatives were working closely with suppliers to mitigate cost impacts where possible amid global fuel and packaging costs. In May 2026 it said retail price increases were outpaced by supplier costs, up an average 4.8 percent year on year.

Foodstuffs North Island was the most negatively rated chain in a supplier review, with 35 percent of respondents reporting a bad experience, according to The Spinoff.

Foodstuffs said the break-up proposal would have significant implications. It pointed to its 3000 supply chain and support centre team members. Any major restructure raises questions about implementation time, disruption, costs, and whether it would deliver savings at the checkout, it said.

The broader context here is political as much as commercial. A supplier publicly backing structural separation — splitting one group into separate competing parts — changes the usual shape of the grocery debate. It is normally framed as shoppers versus supermarkets. Shields puts suppliers alongside shoppers. For National, that is useful. It offers a business voice for intervention. For Foodstuffs, the counter is process and price. Separation would take time. It would cost money. Shoppers may not see the benefit.

People who work the Beehive will read this as a test of where incidence sits, that is who pays and who gains. Shields says margin has been extracted from suppliers and retained. Foodstuffs says costs have come from suppliers and been absorbed. Both cannot be right at the same time. The data to resolve it sits inside commercial terms that are rarely public. That leaves ministers and MPs weighing competing claims about who pays and who gains.