Fairfax Media claims supermarket growth focus on ‘Junk’ food and cigarettes – confidential data leaked
Fairfax Media’s Sydney Morning Herald and The Sunday Age over the weekend have published their analysis of leaked confidential supermarket industry data.
According to the Fairfax report of the data, Australians spend 10 per cent of the annual grocery bill on cigarettes, and one in every five dollars spent at supermarkets goes towards cigarettes or junk’ food.
Tobacco and ‘junk’ foods appear to be fastest growth area
Fairfax Media has reported that raw meat, fresh fruit and vegetables contributed $28 billion of the $85 billion spent on supermarket groceries in the 2013-14 financial year. According to Fairfax, the fastest growth rates came from tobacco products and ‘junk’ foods, which were in excess of $17 billion of combined sales.
Fairfax Media reported that it had obtained data from market research organisation IRI-Aztec data on Australian grocery sales for the 2013-14 financial year. The report was based on the cash register data from every Coles, Woolworths, IGA and FoodWorks supermarket in the country, and added a weighting to estimated sales made at Aldi. It did not include alcohol sales.
Tobacco products appear to be highest revenue earner for supermarkets
According to Fairfax Media, the report showed that Australian shoppers spent $8.5 billion on cigarettes and rolling tobacco with major supermarkets in the 12 months to June 2014, out of an Australian grocery market estimated at $85 billion.
Rolling tobacco was the fastest growing product line of all, with sales up almost 16 per cent in the past year to $960 million. Packaged cigarettes contributed $7.4 billion. The report showed that tobacco and related products contributed more to supermarket revenue than any other category on the shelves.
Top 20 items include Coca-Cola and private label milk
Each item sold at a supermarket is given a unique bar code and “stock keeping unit”, or SKU. Fairfax Media reported that a list of the top 20 SKUs sold included 12 brands of cigarettes, four different-sized packages of Coca-Cola and Quilton toilet paper. Three other food items made that list – the private label milk sold by Woolworths and Coles, and Nescafe instant coffee.
When cigarette sales were stripped out, seven of the top 10 branded products sold in Australia are different package sizes of Coca-Cola, the most popular being a 24-can “slab” of Coke, followed in second place by a 30-can package.
The top four branded food products were all Coca-Cola, followed by Nescafe instant coffee at fifth. Quilton toilet paper was sixth and a 24-can slab of Pepsi Max seventh on the top 10 list.
Spending on supermarket products
According to the IRI-Aztec data, Australians spent $2.47 billion on confectionery, up 5.4 per cent on the previous year. A further $2 billion was spent on soft drinks, $1.8 billion on fresh milk and $1.56 billion on biscuits last financial year. For the first time Australians spent more than $1 billion on snacking chips, up 6.4 per cent.
Consumers spent almost three times as much on ice cream ($1.1 billion) as on health foods ($418 million) at supermarkets.
Biggest suppliers to supermarkets
Despite the huge growth in junk food sales, the three biggest suppliers to Australian supermarkets are British American Tobacco, Philip Morris and Imperial Tobacco Australia, which provide a combined $8.4 billion of annual revenue. The annual contribution of multinationals was much less, with Nestle contributing $2 billion, Coca-Cola Amatil $2 billion and Unilever $1.5 billion.
While tobacco revenue rose 6 per cent on the previous year, the actual number of cigarettes sold at supermarkets fell 2.9 per cent, suggesting that plain packaging and higher taxes are working to reduce smoking rates.
The supermarkets covered by the IRI-Aztec report account for more than 65 per cent of Australia’s $13.5 billion cigarette and tobacco market.
The report also reveals that private label cigarettes have captured almost 1 per cent of the market for packaged cigarettes. Coles has sourced its own private label cigarettes from Germany since 2010.