Duncan Garner: Aisle be damned: Kiwi supermarkets are milking it

Kiwi consumers are getting creamed in the supermarket aisles.
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Kiwi consumers are getting creamed in the supermarket aisles.

OPINION: I've taken a mini-break this week, four short days braving the Gold Coast winter, where some locals warned me it was a "chilly" 21 degrees.

The first thing I did was lose the jeans for shorts. The second thing I did was stop off at the supermarket – not only to get a few things for an-always hungry 6-year-old, but to also test for myself whether we are getting a raw deal on grocery prices in New Zealand.

The answer? On the basics, yes, we are most definitely paying more. The Aussies have it much better and cheaper.

The cheap Aussie milk.
DUNCAN GARNER

The cheap Aussie milk.

For two litres of full cream milk I paid A$2. For three litres of the same milk I paid $3.

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Astonishing, isn't it? In New Zealand – where we make plenty of milk – we simply don't get deals like this.

For a block of butter of butter I paid $3.60. Another bargain – a full $2 cheaper than at home.

It's true – we Kiwi consumers are getting creamed in the supermarket aisles.

And it's no surprise that New Zealand food prices increased more than 3 per cent in the year ending May 2017.

I paid $2.80 for an Aussie avocado – compared to $6 here. My Uncle Tobys porridge was $2.75; it's $5 at home.

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Some items were noticeably cheaper, especially the dairy products and in the meat section. For a lot of the other items, mainly processed foods, the prices were pretty similar to here.

There's varying reasons why we're more expensive and those defending our supermarkets will attempt to deflect, deny and ultimately point you in the other direction. That's their job.

Supermarkets in New Zealand are big businesses; there are only two chains – and they behave suspiciously like it's a cosy duopoly. In the same way rival petrol companies magically all put their prices up by the same amount at the same time.

Independent supermarket owners work hard, they risk a lot, they play hard-ball and there is a huge capital investment. How many of them are poor? Not many. If any.

They are creaming it in New Zealand. This is big business with huge returns.

Look at how upset and defensive they got when then-Labour MP Shane Jones mouthed off against their prices and tactics a few years back.

So how and why can the Aussies offer their people cheaper prices on the basics?

First, milk is a loss-leader in Aussie supermarkets and has been for some time. So basically it's priced to sell and to get people through the door. (Aussie dairy farmers are getting screwed as a result, apparently.)

I must say, it feels good buying cheap, quality milk. Why can't we do this? Why can't Fonterra and the two big chains sit down and do a deal?

My view is they can, but don't want to. And Fonterra wouldn't agree to it when it's getting good prices on the international market.

But if our supermarkets wanted to do this deal for Kiwi consumers they probably could – but it comes down to wanting to, and they clearly don't.

It's not even Fonterra to blame in my view. I blame the supermarkets, whose attitude goes like this: Get stuffed, Kiwis, we're a business, not a charity.

Second, we're paying 15 per cent GST on all goods – the Aussies don't.

There is no GST on fresh food across the ditch so that immediately makes all those food products cheaper.

And of course there are economies of scale. Australia has more supermarket chains, more growers, more people, more buyers, more competition and it passes on the savings on the basics.

It's so darned obvious to see as soon as you enter one of their supermarkets. On the basics the Aussies do it better.

Yes, we apparently have the best and most efficient dairy farmers in the world – but that's not much good to ordinary Kiwis who get no benefit whatsoever and end up paying international prices for local goods.

I call that being shafted.

It's not just the supermarkets that are expensive in NZ.

So many of the Lions supporters complained to me over the past few weeks about the cost of travelling and eating in our country.

Former Scottish and Lions lock Doddie Weir told me he was "bloody gobsmacked" at the cost of travelling around – and said food prices were horrific in comparison to the UK.

I have had NZ mates return from long stints overseas who say the same thing. Sure, tourism is worth $10 billion to our country annually now – but we also need to be careful we offer value for money and not kill the golden goose that is tourism.

We'd be arrogant to think we're the only country that offers a unique experience. Snow-capped mountains, deep fiords, pristine lakes, top class restaurants and beautiful harbours exist all around the world.

Let's be careful not to take the mickey. Otherwise people might stop coming.

Word of mouth is a powerful tool – let's make sure the message our visitors take home is a largely positive one.

* Comments on this story are now closed.

 - Stuff

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