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Ernie Newman: Grocery expert says supermarket discounts aren’t being passed on to customers · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: So the Commerce Commission cracking down on unfair behavior. What
• 0:03
  Speaker 1: they say is unfair behavior in the grocery sector. The
• 0:06
  Speaker 1: Grocery Commissioner is worried about promotional payments between the big supermarkets,
• 0:11
  Speaker 1: the dropoly and the suppliers. He says that around five
• 0:15
  Speaker 1: billion dollars a year in promotional rebates contributes to higher
• 0:18
  Speaker 1: average prices for goods and contributes to price fluctuation. He's
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  Speaker 1: warning the ComCom may have to act if the supermarkets
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  Speaker 1: don't voluntarily stop the rate at which this is happening.
• 0:30
  Speaker 1: Ernie Newman is a grocery policy expert with me this morning. Ernie,
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  Speaker 1: good morning, Good day Ryan. Can you explain to me
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  Speaker 1: why offering discounts or specials at the supermarket getting rid
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  Speaker 1: of those would make life better for us consumers?
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  Speaker 2: Yeah, it's interesting. It's a very complicated market that we're
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  Speaker 2: talking about here, But what the Commissioner is showing in
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  Speaker 2: this report is that there are these vast sums of
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  Speaker 2: money that the supermarkets are negotiating from their largest supply,
• 1:00
  Speaker 2: is not all of which is being passed on to consumers.
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  Speaker 2: So they're talking now about five billion a year in
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  Speaker 2: discounts and rebates. And promotional allowances and whatever. And when
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  Speaker 2: you come to work that I tried to do the
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  Speaker 2: math last night, it comes to you know, for a
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  Speaker 2: family of four, that's about four grand a year per
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  Speaker 2: family that the supermarkets are getting in discounts with their suppliers,
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  Speaker 2: not all by means of which is being passed on
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  Speaker 2: to consumers at the checkout.
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  Speaker 1: You better how much is being passed on and isn't
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  Speaker 1: being passed on? Wouldn't that be central to whether you
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  Speaker 1: do anything about it?
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  Speaker 2: Well? Yeah, but the way in which the Commissioner is
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  Speaker 2: phrasing was it's pretty obvious there is a very very
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  Speaker 2: large amount that is simply going into the pockets of
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  Speaker 2: the supermarkets and not being passed on. And you know,
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  Speaker 2: in a proper competitive market that would not be possible
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  Speaker 2: because of one supermarket didn't pass it on to the customers.
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  Speaker 2: Another one would problem is, of course, we've got a
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  Speaker 2: broken market here. We've only got a duopoly with two
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  Speaker 2: people making decisions for supermarkets at wholesale and retail level
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  Speaker 2: for the entire country. So our market is broken.
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  Speaker 1: Okay, And if what you're saying is true, then you know,
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  Speaker 1: when we started this whole exercise about the supermarkets. We
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  Speaker 1: were told they were making a million dollars a day
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  Speaker 1: in excess profits. So three hundred and sixty old million
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  Speaker 1: dollars a year. What you're now talking about, and what
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  Speaker 1: the Commission is now talking about is billions.
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  Speaker 2: Yeah. Yeah, so come out of loose money floating around?
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  Speaker 1: Did we underest? Are you saying that the million dollars
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  Speaker 1: a day in excess profits was out by what tens
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  Speaker 1: hundreds of millions financially?
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  Speaker 2: Yeah? Yeah, there's far more loose money floating around in
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  Speaker 2: this sector than the Compress Commission has identified in previous occasions.
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  Speaker 1: But the problem is they haven't. They haven't identified it,
• 2:48
  Speaker 1: had they They've just said, hey, look there are five
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  Speaker 1: billion dollars of payments going from A to B. They
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  Speaker 1: haven't said how much of it's actually been passed on
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  Speaker 1: or not. This is a Is this not a phishing exercise?
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  Speaker 2: No, it's more than that. The problem we've got here
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  Speaker 2: is we've got a market that is almost it's almost
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  Speaker 2: mafia alike. You know, there are just so many discounts
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  Speaker 2: and rebates and allowances and money going sort of under
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  Speaker 2: the table, but nobody from outside can you can absolutely
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  Speaker 2: say with certainty how much loose money. There is slotting
• 3:20
  Speaker 2: around in the system. What we do know is that
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  Speaker 2: it's the supermarket servant at the top level and not
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  Speaker 2: the consumers that are getting the benefit of a great
• 3:28
  Speaker 2: deal of this.
• 3:29
  Speaker 1: Ernie, appreciate your time this morning. Ernie Newman, who's a
• 3:32
  Speaker 1: grocery policy experts, has gone nine minutes away from six
• 3:35
  Speaker 1: loads of texts on this. Ryan Specials add variety and
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  Speaker 1: fun to the drag of shopping. I love this. Don't
• 3:42
  Speaker 1: touch my don't you come for my specials? Commerce Commission
• 3:46
  Speaker 1: this is interesting. I'm a supplier to food stuffs, and
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  Speaker 1: what the commissioner is talking about is that we might
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  Speaker 1: have a product that we want to sell at say
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  Speaker 1: two dollars fifty every day, but food stuffs make us
• 3:58
  Speaker 1: put the price up so many a year so that
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  Speaker 1: they can call it a special, when all we really
• 4:04
  Speaker 1: want to do is to have the price lower every day.
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  Speaker 1: But the question is overall, as the price on average
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  Speaker 1: higher or lower than it would otherwise be, That's the question.
• 4:15
  Speaker 2: For more from Early Edition with Ryan Bridge. Listen live
• 4:18
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• 4:21
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