Coles food price blitz pulls industry down, down

Posted by Josette Dunn on 4th February 2011

Supermarket retailer Coles is using its market dominance to destabilise the whole of Australia’s food and grocery supply chain by cutting prices on essential daily items, the Australian Food and Grocery Council (AFGC) said today.

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AFGC highlighted that Coles’ “Down, Down” campaign to heavily discount staple foods like bread and dairy products was designed to increase traffic in Coles supermarkets without considering the long-term, flow-on effects to farmers, industry and consumers.

AFGC Chief Executive Kate Carnell said Coles’ claim that their price cutting won’t affect farmers or food and grocery manufacturers was misleading.

“At the end of the day, this price blitz produces a new floor price on staple products – Coles is using its market dominance to destabilise the marketplace, triggering other major retailers to match prices to maintain their market share,” Ms Carnell said.

“This approach could seriously undermine jobs in Australia.”

Australia’s $102 billion food and grocery manufacturing sector employs more than 288,000 people – including about half in rural and regional areas – representing about three per cent of all employed people in Australia paying around $13 billion a year in salaries and wages, according to AFGC’s State of the Industry 2010 report.

“Coles’ short-sighted move is not a good outcome for ensuring future sustainability and security of Australia’s food manufacturing industry which is already under pressure from increasing costs for labour, energy and water – as well as from rising imports and the latest natural disasters,” Ms Carnell said.

“It’s vital for Australia’s largest manufacturing industry to have a long-term, strategic focus to ensure Australia has a safe, nutritious, affordable and sustainable food supply into the future.

“Industry fully supports the Federal Government’s move to develop a National Food Plan in partnership approach with relevant stakeholders, retailers and leading food manufacturers to achieve a broad-base ‘whole-of-supply chain’ strategy.”

Industry is also actively engaged in the National Food Policy working group to provide high-level policy perspectives and advice on issues across the whole food chain – from paddock to plate.