Mike Hosking’s Free Market Take Doesn’t Survive Contact with Reality
New Zealand’s supermarket duopoly isn’t a market failure — it’s a system designed to shut out challengers. With public pressure rising and the right players already in the wings, will we finally get a third player at scale?
Mike Hosking’s line — “If there was money to be made, someone would’ve entered the market by now” — might sound tidy on air, but it collapses under even basic scrutiny. What he’s ignoring (or deliberately sidestepping) is that market entry isn’t just about demand or margins. It’s about whether new entrants can access the playing field at all. The issue in New Zealand isn’t a lack of consumer appetite for alternatives — it’s that Foodstuffs and Woolworths have a structural stranglehold on the entire grocery ecosystem.
Supply Chains
The duopoly secures the best wholesale deals — and wields its procurement muscle to discourage suppliers from working with competitors. Suppliers have reported being punished, delisted, or squeezed out for offering equal or better terms to alternative retailers.¹
Distribution Networks
Even if a challenger gets access to wholesale goods, getting those products to shelves is another story.
Foodstuffs and Woolworths operate their own national freight and distribution networks, including temperature-controlled logistics. They’ve locked in long-term contracts with major carriers, built bespoke regional hubs, and control delivery scheduling from port to shelf.
For any new entrant, this creates a dual challenge:
1. Lack of scale to negotiate competitive freight rates
2. Lack of infrastructure for chilled and perishable supply chains
New retailers often face higher per-unit costs for transport, unreliable delivery slots, and inconsistent last-mile logistics — especially in provincial towns. That’s before even trying to meet shelf-life and food safety requirements.
Unless a third party steps in to provide neutral, scalable distribution, new entrants are stuck either paying more or building from scratch.
It’s not just that the store network is locked down — the roads, warehouses, and refrigerated trucks are, too. Replicating that infrastructure is prohibitively expensive for new entrants.²
Prime Retail Locations
The incumbents have historically locked down prime sites with restrictive covenants, preventing competitors from setting up shop even after they’ve left the location. This tactic became so problematic, the government stepped in — banning the practice through the Commerce (Grocery Sector Covenants) Amendment Act 2022.³ The Commerce Commission has also filed proceedings against Foodstuffs North Island for using these tactics.⁴ There aren't many players with a national network of large format stores who are also interested in grocery, in fact I can only think of one.
Shelf Space and Brand Leverage
Shelf space is king — and the duopoly controls it. What gets stocked, where it goes, and what gets promoted are all dictated by two companies. Independent brands live or die based on shelf access and placement.² This isn’t a market with high barriers. It’s a market that’s been constructed to preserve control.
The 2 Degrees Effect
Tex Edwards gets this. He saw the same playbook in telco. In the 2000s, people said: “If there was money in it, someone would compete with Telecom.” Then 2degrees showed up — but only after regulation forced open access. Competition worked. Prices dropped. Consumers benefited. Until that kind of structural reform happens here — structural separation, procurement oversight, land access protections — the supermarket duopoly will continue to profit off a tilted playing field.
It Didn’t Work the First Time. But This Time, the Timing Might Be Perfect.
So who could take them on? The Warehouse Group (TWG) is hiding in plain sight.
They already have a national footprint of large-format stores — a strategic asset no other challenger can replicate. And with Kmart eroding their brand relevance, TWG needs to evolve — fast. Their first tango with The Warehouse Extra and then Costco didn't play out, maybe this time.
But they'd need some serious help
The New Model: TWG + Costco + Freight + Government
TWG retrofits its enviable store footprint for fresh, chilled, and frozen grocery.
Costco supplies the backend, wholesale logistics, pricing scale, and imported product free from existing supplier constraints.
Freight partner with scalable chilled and grocery national presence, not tied to the duopoly.
Government enables structural separation enforcement, supports fast tracked infrastructure development, and protects suppliers from retaliation. Maybe there's even some capital investment available from the Super Fund.
It’s Warehouse Extra 2.0 — but with legs this time.
Who Wins?
- TWG gets a refreshed value proposition when it needs one the most
- Costco gets instant national scale without new store builds
- Freight partner/s get a national role in supermarket supply chain
- Suppliers get an alternative route to market
- Consumers get actual choice and lower prices
- Government gets a visible win on the cost-of-living crisis
Who Moves the Groceries?
Even with the stores, the supply, and the policy support — food doesn’t move itself.
One of the biggest hidden barriers to building a supermarket challenger in New Zealand is logistics. The duopoly has built deep, vertically integrated freight networks — and new entrants face steep cost, reliability, and access barriers when it comes to chilled and frozen distribution.
Any credible third player will need a freight partner that is independent, scalable, and trusted.
Mainfreight or Freightways
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NZ-owned global logistics firm with a strong reputation for reliability, scale, and independence
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Operates chilled and dry freight nationally
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Ideal candidates for building a neutral national cold chain to support retail reform
NZ-owned global logistics firm with a strong reputation for reliability, scale, and independence
Operates chilled and dry freight nationally
Ideal candidates for building a neutral national cold chain to support retail reform
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