Shopper's receipt shows how much less groceries cost in the UK compared to NZ

The receipt, from Lidl in Brixton, lists 20 items for £21.19 (NZ$41.37).
The receipt, from Lidl in Brixton, lists 20 items for £21.19 (NZ$41.37). Photo credit: Supplied/GettyImages.

If there was ever any doubt that New Zealand food prices are higher than in other countries, a shopper's receipt while travelling abroad shows they are.

It comes as The Commerce Commission's July market study into the grocery sector found the present "duopoly…is not working well for consumers". Following the COVID-19 lockdown from August 18, some Kiwi shoppers say they've spent more, frugal shoppers noticing higher milk, dairy and meat prices.

After topping up on groceries while visiting family in the UK, a Kiwi woman estimates they cost "almost half" what she would've paid in New Zealand.

The woman who asked to be referred to as Louise, saved a receipt for food she bought at discount chain Lidl in Brixton, south of London.  

Lidl is a German supermarket chain that is widespread across Europe. Like competitor Aldi, it is a discount supermarket, meaning its products are cheaper than larger chains.  

The receipt, dated September 14, 2021, includes 20 items for a total cost of £21.19 (NZ$41.37). 

The mix of items includes milk, bread, coffee, three types of cheese, and ham slices. 

It includes five types of fresh vegetables (one cucumber, one organic tomato, a corn on the cob, 250g of sliced mushrooms and three-pack of onions); and two types of fresh fruit (400g of strawberries and one lime).

"Cheese, coffee, tinned goods, fresh fruit and veg are so much cheaper," Louise said

One pint (around 568ml) of semi-skim milk cost 50p (NZD 97c/17c per 100ml), the receipt shows.

Decaffeinated ground coffee was £1.09 (NZ$2.13).  A single cucumber was 43p (NZ 83c). A wholemeal seed loaf cost 79p (NZ$1.53).

The receipt, dated 14 September, 2021, lists 20 items for cost £21.19 (NZ$41.36).
The receipt, dated 14 September, 2021, lists 20 items for cost £21.19 (NZ$41.36). Photo credit: Supplied.

"I actually did a conversion for each item when I got home (exchange rate roughly $2 to 1 pound) calculator says it would've cost $75 in New Zealand (I also factored in seasonality),'' Louise added.

"The coffee was actually proper ground coffee, not instant so [it was] really cheap compared to home, where I usually pay about $6."

On Saturday, Pak'nSave Royal Oak online prices show the cheapest one litre bottle of milk ('Value lite milk') cost $2.43 (NZD 24.3c per 100ml). At Countdown Wellington CBD, a 1 litre bottle of Countdown milk trim cost $2.46 (NZD 24.6c per 100ml).  Based on Saturday's supermarket prices, refrigerated milk is just over NZD 7c per 100ml higher than the pint purchased at Lidl.

As New Zealand is a smaller market compared to the UK (5 million people compared to 66 million people), this affects the size of production runs and economies of scale, Katherine Rich, chief executive at NZ Food and Grocery Council told Newshub.

The cost of distribution to and around New Zealand, is also a factor.

But there are also big differences in the way the two markets operate. 

A Grocery Code of Practice, put in place by the UK Government 11 years' ago (in 2009) improved the treatment of grocery suppliers by supermarkets.  The UK currently has seven main operators (including Tesco, Asda and Sainsbury’s), which have a combined market share of around 90 percent, Rich said.

Comparatively, the New Zealand grocery market is dominated by two large players: Woolworths NZ (Countdown) and Foodstuffs (New World, PAK’nSAVE and Four Square).  Operating as a duopoly, they have at least 85 percent of the grocery retail market.

"This market dominance has led to higher prices, higher than normal profits, less innovation, less choice for consumers and in some circumstances poor treatment of suppliers," Rich said.

The Commerce Commission's enquiry into the grocery market in July found grocery prices were high when compared internationally, and the main supermarkets "appear to avoid competing strongly with each other, particularly on price", Rich said.

The current lack of competition means there is little incentive for the chains to give consumers genuinely lower prices. New retail competition would help suppliers spread their risk over more customers.  

"This would require the supermarkets lowering their own margin expectations, which can be as high as 50 percent," Rich added.

Prices could be lower simply by requiring Pak'nSave stores to "pass through" all promotional discounts from suppliers to shoppers, in the form of lower prices.

"With few exceptions, Pak’nSave stores buy all stock at a promotional price from suppliers and only selectively pass on the discounts to shoppers," Rich said.

On weeks where goods were not on promotion, stores were deriving "supernormal returns", she said.  The practice, known as "investment buying", is ruled out by Codes of Conduct in the UK and Australia.

Chris Quin, owner of New World, Pak'nSave and Four Square supermarkets in the North Island said the chain wasn't "ripping Kiwis off", telling Newshub "our profits are not excessive".

"For every dollar spent in a supermarket, 68 cents goes back to the supplier, 13c is tax and the supermarket takes 19c. Fifteen cents of that is used for things like paying staff so it only profits 4c, Quin said.