DOWN WITH THE DUOPOLY
For grocery giants Coles and Woolies, it’s like being beaten with a wet lettuce leaf.
The new ACCC Chairman this week called on suppliers to dob in the duopoly for misuse of market power.
Their response? Bring it on.
Like playground bullies, they’re accustomed to pummeling their victims into submission – in this case, the farmers.
Australia’s biggest tomato grower has just gone broke.
SP Exports Managing Director Andrew Philip blames the price wars, which moved from milk, bread and beer to fresh produce.
“The supermarkets can’t keep on screwing down the major growers and expect to have a local fresh fruit and vegetable industry,” says the chairman AusVeg, John Brent.
This is how it works.
The dreaded duopoly controls 80 per cent of the grocery market.
To retain their contracts, suppliers have to sell at dramatic discounts to pay for warehousing costs, shelf position, and breakage allowances.
Then there’s vertical integration.
Coles and Woolies aggressively market their generic brands, which are priced well below the cost of production.
The suppliers eventually go broke.
We all feel sorry for families forced to walk off the land. But, ultimately, whose fault is it?
Take a look in the mirror. It’s you, and me. (Ed: Trace, please don’t insult our readers! Me: It’s OK, stay with me!)
We’re busy people. We want convenience at a competitive price. But we don’t think about the consequences for the future of this great nation.
Successive governments have created this problem. But we have the power to fix it.
So, how did we get here?
In the late 1970s, the merger provision of the Trade Practices Act was watered down. This allowed Coles to gobble up smaller grocery retailers. There was détente in 1994 when Allan Fels stopped Coles taking over Franklins.
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21 Responses to this article
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blue February 23, 2012
Don’t buy the cheap $1 milk if you can afford not to. Buy the properly priced stuff and hopefully Coles and Woolies will not be able to do away with our milk choices completely and leave us with only the $1 stuff — having wiped out the dairy farmers they don’t own. What would happen after that is that we’d be stuck with no choice – only the $1 milk. Then we’d find the cost of that $1 milk increasing until we are pretty much paying what we were for our milk before the cheap milk was introduced and we’d only be able to get the cheap milk, only it wouldn’t be so cheap anymore. Because then they would have the whole market and we’d end up paying even more than we would in a competitive market. Same with the $1 bread too. Stay away from all home brands. And don’t buy items that come on sale because coles and woolies aren’t taking the loss, apparently. The producers of those items are. If we keep buying the cheaper stuff all we’ll have left is no choice and eventually inflated prices because there will be no competition left.
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Len Da Hand February 23, 2012
Tracey you have absolutely no idea of the history of grocery retailing in Australia, the 2008 inquiry i think was the fourth in last 50 years …. nor the way these two major supermarkets do business. If farmers sell to these companies they have rocks in his head!!!!!! Any business that resorts to price taking will always get done in the end. People dont shop on price – they shop for a multitude of factors. All you have offered here except some glib statements about supporting local business. Tell us WHY you shop where you shop – must be at least 10 reasons why. Its pompous pontificating by the likes of Tracey Spicer who says “its all your fault” advances the debate not one step
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donna February 23, 2012
Coles and Woollies want us to buy their $1 milk, get rid of the competition, and then gradually force us into using long-life milk: no refrigeration required and so it’s cheaper for them to store, transport etc. Ultimately fresh milk will become a luxury item from small dairies regular people can’t afford.
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Helen Mary February 23, 2012
I do not agree with Tracey’s’ statements , even though I know it is hard for producers when milk sells for 1 dollar per litre. A lot of us, including myself are average families struggling on one person working full time and the other casually. We are trying to cut costs and raise families and price is our determining factor.
I come from an agricultural background and grew up on a cattle and sheep property. I want to sup[port local produce and regularly shop at butchers and fruit shops. However, I still have to think about price and the veggies I buy (apart from those we grow ourselves) I buy at the best price.
Our biggest problem is cheap imported fruit , such as oranges form California and we need protection for our industries like they have in the USA AND THE EEC. Have a look at the farm subsidies operating in these countries and spare a thought for the average families like us, struggling to eat good, cheap food.
Maybe you don’t need to worry about price, but the rest of us do and if we can save money we will. -
Carol February 23, 2012
Please check out http://www.dicksmithfoods.com.au everyone.
Australian grown, Australian manufactured & Australian owned.
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MrsP2011 February 23, 2012
There’s a simple answer – bring back Allan Fels. He was a force to be reckoned with, ruled with an iron rod and they were shit scared of him.
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Sandy Jenkins February 23, 2012
I started doing just this about 6 weeks ago. Basics from Aldi, meat from butcher, fish from fishmonger and fruit/veg from local Italian fruit+veg store. I was aiming just to keep my money away from Woolworths and Coles, for the reasons Tracey explains in this article, but guess what? I am finding I am actually saving $100 a week by shopping in this way (as compared with a complete shop at Woolworths). And we are eating better quality food (esp fruit and fish). Okay it takes me a little longer, but my advice to you all is to try it – you might be surprised to find that the big supermarkets are not as cheap overall as they pretend.
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James February 23, 2012
Sandy, you’ve hit the nail on the head. A lot of people don’t realise that you can save money by shopping at local providores. I shop at Dick Smith’s and Aldi – strange, I know – for dry goods, then local fruit and meat shops for the rest. It’s definitely cheaper than at Coles or Woolies.
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Deborah February 23, 2012
Helen Mary, I said, “Don’t buy the cheap $1 milk if you can afford not to.” I realize that many people are really finding it tough economically and are of course, going to buy the cheap milk. I completely understand this and if I was in such a situation I’d be buying the cheap milk too. But I’m not. I choose to have only one tv, one computer, one couch, etc. in my home. I don’t upgrade anything until it’s worn out or broken and unrepairable. That way I can afford to buy the higher cost milk, not the home brand milk. I suspect many Australians are in the same boat as me but are just unthinkingly taking advantage of the cheaper milk. Not realizing that if we do this, eventually we will have no choice between milks at all. And that it may actually, eventually be, imported milk. And then our dairy farmers will be stuffed. Just like you talked about your fruit. Subsidization is a factor, yes. But the supermarkets are pretty likely to have had something to do with it. Replace the word ‘milk’ with ‘fruit’ in what I’ve just written and you can see how the big supermarkets hold our farmers, our producers, to ransom. But the only reason that those supermarkets can do that is because we go along with it. Unknowingly. Until now. Now many Australians have the choice to pay the extra needed to keep our farmers farming which will mean we will always have choice of which product.
These big supermarkets are cooperations. They have no responsibility whatsoever except to their shareholders. Their duty is to make money. No matter who it hurts.
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Deborah February 23, 2012
I mean ‘these big supermarkets are corporations.
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Aeron Winters February 23, 2012
Some of us don’t have a choice at all. There are no other stores for me to shop at. I don’t have a car and all of the groceries that I can walk, bus or train to are one of the big two. I live across the street (literally) from Bi-Lo (part of the Coles group) so I shop there every week and push my trolley home. There is a so called wholesale butcher in the shopping centre but unless I want everything crumbed or really disgusting sausages, I have to buy the Coles ones. After living in the area for four years, I still have not found a single green grocer or fishmonger that I can access without a car (or travel to without spending the whole day changing buses). I do try to only buy what is in season (because it is the cheapest and nicest) but it is still from Bi-Lo. Every week (or at least it feels that way), there are less and less varieties of products for me to choose from, but I feel completely helpless to do anything about that. I wish that rather than just pontificating about the problem, someone would offer real solutions for families like mine.
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Allikat February 23, 2012
Girls, if you live in a big city you can get home delivery from “aussie farmers”. Check it out and bypass the duopoly. They deliver dairy products, fabulous sour dough breads and other bakery goods, meat , fruit &veg and are ever expanding into prepared meals like lasagne, marinated seafoods, etc. They have seasonal specials too like mangos and now apples.
Google “aussie farmers” and help support local farmers by buying throuh this co -op.
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Maripa February 24, 2012
Why not join or start a Food Integrity Group? See here – http://www.fig.org.au/ – for how we started ours and what we do.
We’ve been going for three years now, and were only incorporated this month, and we ONLY support and encourage local growers. We supply locally grown organic and chemical-free produce to the Central Coast, NSW community.
I know we’re not a total answer to the grocery duopoly but is a great start – we’ve grown to now get local dried foods and staples, organic eggs, meat, & wine and all this started from a one humble veggie box!
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Lynne February 24, 2012
Just wanted to point out that Aldi is actually bigger than either Coles or Woolies and German to boot, so any profits go back to Europe. Aldi also imports almost all of the food they sell.
I used to work for Woolies, so perhaps I am biased, but they employed more than 180,000 Australians then and it is Australian owned and run. Not all bad?
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ellenni February 26, 2012
i dont buy generic brands. why? apart from the fact i dont like the origin of some of the products i dont like their packing. it costs a bit more but we need to protect our own. our governments sell out all the time. they are supposed to support the public but all the seem to do is try to stay in power long enough to keep their jobs. i support my butcher and i buy from our local greengrocer. all those who can afford to do so should pay the extra for australian products. we must protect our producers. we have lost so many industries lets not lose our fresh food industry too. i dont want to buy oranges from america or garlic from china or mexico.
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ellenni June 14, 2012
i wont buy generic brands. i want brands i recognise. so i save on fruit and veg at the market and pay extra for my groceries. dont use loyalty cards either. they dont stock my coffee now so i bought some on line. the less i go to the stores the less impulse buying.
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Janice September 7, 2012
It’s great to hear all of the alternatives to feeling trapped by the duopoly. I feel supported in my ‘lone’ decision about a year ago to boycott Coles and Woolworths. I also pay a little more to buy alternatives to the branded products in my local IGA. One of my daughters buys from Aussie farmers and swears by their products-and enjoys not having to drag little ones around supermarkets. I guess we all do what we can and, in the end, individuals can make a difference. Let’s stay away from comparisons about who makes the greatest sacrifices in following their values and enjoy the debate-and the endless novel ideas in how to fight the ‘big bullies’.
