Stores on cusp of food price battle

Further supermarket discounts may follow Foodstuffs’ move to cut prices on selected food items, an industry observer says.

Supermarket giant Foodstuffs is cutting prices by an average of 10 per cent on more than 110 everyday items, to 2021 levels.

Last week rival Countdown announced a temporary price freeze on 500 items during winter.

“Foodstuffs, I would argue, has come out on top in the prices. So cheese, they’ve got it down to $9.99 [from] $13 and bread’s down to $1.19 versus $2,” said Hamish Gow, professor of agribusiness at Massey University.

The discounts on its own-brand products were aimed at priceconscious buyers, he said.

Foodstuffs had a double margin on store brands — a manufacturing and a retailing margin — and were driving customers to those products.

“Price-conscious consumers would move across from the national brands to the store brands, and that’s where Foodstuffs will be able to gain from that because they get a double margin on it.”

Asked if Countdown now needed to respond with price cuts rather than a freeze, Gow said: “I would argue that they do . . . they dropped prices in Australia, they haven’t done it in New Zealand.”