Almost 500 locally owned supermarket operators have signed open letters warning that proposals to break up the Foodstuffs co-operatives could increase costs, threaten investment and create new risks for regional and rural communities.
The owner-operators, representing PAK’nSAVE, New World and Four Square stores from Houhora to Stewart Island, are pushing back as supermarket competition and grocery prices become a major Election 2026 issue.
The letters have been signed by members of both Foodstuffs North Island and Foodstuffs South Island, with the grocers arguing that breaking apart the century-old co-operative structure could undermine the shared buying power, distribution networks, technology and infrastructure individual stores rely on.
The South Island operators say the co-op is not separate from their stores but collectively owned by them, allowing local supermarkets to buy competitively and move products throughout the South Island. They argue shared logistics and infrastructure help smaller communities access products and services on similar terms to larger centres.
Their warning is particularly focused on provincial New Zealand. South Island operators say dismantling the model could push up costs and potentially threaten the viability of smaller stores that rely on the co-operative’s support.
The intervention comes amid continuing political pressure over New Zealand’s highly concentrated grocery sector. The Government has previously said Foodstuffs and Woolworths effectively control about 82 percent of the market, and has been examining structural intervention alongside measures intended to make it easier for new supermarket competitors to enter New Zealand.
Economic Growth Minister Nicola Willis said last year that options being examined included separating supermarket brands, separating wholesale and retail operations, or other forms of restructuring. She also acknowledged that forcing structural change would carry costs and risks that needed to be weighed against potential benefits for shoppers.
Foodstuffs owner-operators say they support efforts to make groceries more affordable but question whether breaking up the co-operatives would actually produce lower prices.
The debate is becoming increasingly crowded politically, with Labour also campaigning on grocery reform, including separating the wholesale operations of Foodstuffs and Woolworths from their retail businesses and strengthening access to wholesale supply for independent grocers.
For shoppers, the competing arguments leave a fundamental question at the checkout: would breaking up the supermarket giants create the competition needed to bring prices down — or dismantle efficiencies that help keep food moving into communities across Aotearoa?
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