Woolies’ Mount Franklin decision represents distinct shift in supermarket strategy

Posted by Andrea Hogan on 26th July 2017

Woolworths’ decision to decrease the amount of Coca-Cola Amatil’s Mount Franklin water it stocks signals a distinct shift in supermarket strategy away from big brands to private-label products says IBISWorld.

Analysing Woolworths decision to stock less Mount Franklin options, IBISWorld Senior Industry Analyst, Nathan Cloutman, said this type of move is seen as a way for supermarkets to boost the performance of its private-label products.

“Private-label products account for approximately 25 per cent of total sales in the supermarkets and grocery stores industry,” said Cloutman.

“Woolworths is increasingly looking to expand its private-label product range, including phantom brands. This trend follows a strategy that has been strongly pursued by ALDI, to drive consumers in store through low private-label prices.”

Following UK private label trend

Cloutman said Australia’s move towards more private-labels follows what is happening in the United Kingdom where private-labels are expected to account for 40 per cent of total sales in the 2017-18 financial year.

“It is expected that Woolworths and Coles will increasingly expand their private-label ranges, to boost their competitiveness against Aldi,” Cloutman said.

“Brands, such as Coca-Cola Amatil, are likely to increasingly innovate to keep their products on supermarket shelves. Areas of innovation include expanding the range of premium products and offering healthier alternatives.”

Taking on Australia’s booming bottle water market

The bottled water market is a booming one in Australia, and other international markets, with Roy Morgan Research reporting that in 2015, 5.3 million adult Australians drank bottled water at least once a week, a jump on the 4.9 million consuming bottled water in 2014.

The same study found that between January and December 2015, Mount Franklin was by-far Australia’s leading bottled water choice, having an approximate 40 per cent market share.

Coles came in second with its private label water taking 14 per cent of the market. At the time, Woolworths private label water did not make it into the top 10 of purchases.

Bottled water consumption in Australia: our 10 most popular brands

Source: Roy Morgan Single Source (Australia), January–December 2015 (n=3,662).


Food retailing researcher, Associate Professor Gary Mortimer from Queensland University of Technology says Woolworths decision to cut down on Mount Franklin was likely the supermarket trying to gain share of the bottled water market.

“It is a smart move,” Associate Professor Mortimer told Australian Food News.

“If you have 10 brands you are sharing the profit among them all, if you cut down on brands, those left get more money, which hopefully includes your own private label,” he said.

Woolworths said about its decision to stock less Mount Franklin that –

“Our customers are purchasing a wide variety of water options – both branded and non-branded – and as the category continues to increase in popularity we will respond to meet our customers demands in this space.”

CCA says Woolies decision was not a targeted one

With Woolworths choosing to stock less Mount Franklin coming recently after it decided to no longer stock the new Coke No Sugar, CCA has said the decision was not targeted at CCA.

“It reflects Woolworths’ decision to reduce the availability of multiple brands across several manufacturers, and simultaneously expand the ranging of their private label water,” CCA said.

CCA further stated that the decision will have minimal impact on its business.

“Our water strategy isn’t about just one brand, it is about a full portfolio including Mount Franklin, Pump, Neverfail and others with a strong focus on immediate consumption channels,” CCA said.

“Grocery water sales are important to us, but are only one part of the strategy.”


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