Coles targets chooks for new price war

Posted by Nicole Eckersley on 29th March 2011

coles_wideweb__470x3090.jpgColes has pegged fresh chicken as the next target for its ‘Down, Down’ price reduction campaign, sparking fears of a new price war with rival Coles and further concern that primary producers will eventually bear the financial burden of the supermarkets’ cheaper products.

Coles boss Ian McLeod told The Age that chicken is next on the company’s list last night, just hours before he was due to appear in front of a Senate economics committee to explain the price war’s implications for competition and farmers.

Coles has maintained that its campaign is saving Australian consumers money in difficult times, but many have criticised the supermarket for creating unrealistic price expectations, after it slashed its own-brand milk price to $2 per 2-litre bottle, a move which Woolworths swiftly reacted to by reducing its own milk prices.

After receiving heavy criticism about the move’s effect on the beleaguered Australian dairy industry, Coles agreed to absorb the full cost of its price reduction, and Woolworths made a similar committment, but neither has agreed to do so indefinitely.

At today’s senate inquiry, while Coles maintained the price cuts were sustainable, Woolworths disagreed.

Now it appears chicken will be next, among other planned cuts by Coles.

‘The latest product to have prices reduced as part of our Down Down campaign is fresh Coles chicken and we have more price cuts planned in the next few weeks,” McLeod told The Age.

Coles has not yet announced whether the price cuts will apply to its entire fresh chicken range, or if it will apply only to standard factory-farmed offerings. A greater price discrepancy between free-range and standard chicken could be seen as a move to influence shoppers away from higher-welfare offerings.

Vocal critic of the campaign, Senator Nick Xenophon, described the big two as “drunk on their market power” and wrote the ACCC off as a “toothless chihuahua”.

The senate enquiry, originally limited to milk, has been expanded to include other price-reduced items such as beer and eggs.