Dairies Tell The Commerce Commission They Can Deliver Cheaper Groceries

The Commerce Commission has been told that New Zealand’s 4,000 plus owner-operated dairies and service stations are the third way for both cheaper groceries and reduced car journey emissions.

“As dairies are in Kaitaia to Bluff and in our biggest cities and smallest towns, we are the third way for cheaper groceries but were initially overlooked in the Commission’s draft report,” says Sunny Kaushal, chair of the Dairy and Business Owners Group.

“Having made a written and now an oral submission on the Supermarket Price Inquiry, we can say that view has now changed. “Dairies do not need taxpayer money or planning policy privilege. Mega operators, like Aldi, are big enough to look after themselves with revenues of US$109bn in 2019 alone.

“Instead of ‘Think Big’ we said to the Commission to ‘Think Small.’ That's by empowering 4,000 plus local businesses to deliver grocery items at lower prices. That’s good for us, it is great for consumers and it cuts unnecessary car journeys in a win for the environment.

“We advised the Commission to structurally separate the supermarket duopoly’s wholesale and distribution centre business units. This suggestion seemed to have a genuine cut-through.

“Doing this means that wholesale and distribution centres will compete with one another for suppliers and retail shelf space. Whether a Pakn’Save or a dairy. Lower prices will be passed onto consumers in dairies because that means more customers through our doors and with it, increased revenue.

“Supporting this idea is that most distribution centres are in Auckland, Palmerston North and Christchurch, with Foodstuffs having others in Rotorua and Dunedin. There’s huge spin-off for hospitality in doing this because Foodstuffs dominates wholesale food service.

“Ramming home our opportunity is Nielson research done for Z Energy’s 2021 Investor Day. This showed the grocery market is worth some $19.6 billion, a bit smaller than what StatsNZ said in the Draft report, but with dairies and service stations having 17.34% of the market.

“At $3.4bn, we may be small as individual businesses, but as a sector, we represent a huge opportunity for lower grocery prices. Express-sized stores are massive overseas and these reduce the need for supermarket car journeys that generate huge amounts of CO2 emissions. “The Commission seemed genuinely pleased to hear from dairy owners and to see a representative body in the process of being formed.

“Covid-19 taught us that community bubbles are best and as a sector, we want to provide more than the essentials. "With our colleagues in retail butchery and greengrocers, we can breathe life back into local shopping centres. That starts with creating a fiercely competitive wholesale/distribution centre market,” Mr Kaushal said.

For a copy of our submission, click here.

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