Foodstuffs, the supermarket co-operative with about half the New Zealand market, is scotching reports its PAK'nSave stores have embarked on an Australian-style price war for milk in response to a rival's $1/litre promotion.
Customers have been flocking to Auckland-based boutique supermarket chain, Nosh, to buy its Cow & Gate milk at $2 for two litres, a 55 per cent discount. Nosh said the price cut, which runs until the end of the month, was to "raise awareness of the issue of high milk prices in New Zealand."
"Nosh's price drop on milk is a great gimmick designed to drive customers into a store where the majority of products are significantly more expensive than your average supermarket," said Rob Chemaly, general manager retail, at Foodstuffs Auckland. "We don't believe this type of price discounting is sustainable."
Mr Chemaly said the co-operative's supermarket owners set their own prices "and it is possible some stores may choose to offer further discounts."
In Australia, angry dairy farmers have demanded a Senate inquiry after supermarket giants Coles and Woolworths slashed the price of milk by 33 per cent to $A1 ($NZ1.29) a litre, squeezing payments for raw milk.
In New Zealand, where there's a parliamentary inquiry into what are seen as high milk prices and criticism of Fonterra Co-operative Group's role in pricing, Federated Farmers has welcomed the prospect of a retail price war.
"Frankly, Nosh is doing more to open up competition at the retail end than any narrowly focused inquiry can ever achieve," said Federated Farmers dairy chairman Willy Leferink.
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