While in Oz, there was a lot of talk and newspaper space given over to the heated debate about the Coles/Woolworths milk price war. Since I seem to have collected a number of American readers, Coles and Woolworths are two supermarkets in Australia – basically, the only two (well, there is also Aldi and Franklins but they are much smaller). Dairy farmers are slinging accusations at Coles and Woolies, calling them bullies.

So the story is: the two supermarkets decided to cut the price of home-brand milk by up to one-third, making milk cheaper than bottled water. Milk prices were slashed to AU $1.00 a litre. Of course, shoppers are smiling but this sort of ridiculous discounting war (basically a loss leader for the supermarkets) is not sustainable. Dairy farmers are being squeezed by the supermarket giants as they seek to impose their pricing on suppliers. Ultimately, Coles and Woolies will pass the cost of heavy discounting onto Mum and Dad customer. No more smiles.

What’s going to happen when dairy farmers have to close up shop? In Western Australia, for example, the number of dairy farmers has fallen over the past 12 years from 419 to 165. So when milk producers are defeated, what will Oz do – import milk from China? And we know how that might turn out. Australian dairy farmers are now talking about taking illegal action – boycotting milk supplies.

In fact, milk seems to be just the beginning. Coles has a campaign called “Down, Down” and are heavily discounting staple items like bread, breakfast cereals, dairy products, health and beauty products. Basically, the prices of the most popular items. This is forcing Woolies to match the Coles price. I trust that the Australian Competition and Consumer Commission (ACCC) is looking into the potential misuse of market power on dairy pricing practices.

Now, I’m not going to say that Coles and Woolies caused us to move from Oz to New Zealand. But I will say that I was becoming concerned with the lack of variety when it came to shopping for fruit and veges and other staple items. When I was growing up, I used to go with my mum to the local fruit and vege shop; then on to the butcher’s; followed by the cake shop; the newsagent and so on. All individual, speciality shops. But then came the big supermarkets, which offered all you needed under the one large roof. I was also becoming concerned about the antibiotics that are allowed in meat in Australia.

At least here in Oxford, I can go to the local butcher shop. In Rangiora, I can go to a shop called Bin Inn (NZ-owned), which is basically a bulk wholefood and speciality market. Here I can pick up spices, organic foods, international foods. I don’t have to purchase my stuff at New World or Countdown supermarkets. There are still small speciality shops in rural NZ like the shop I buy ribbons from in Rangiora. I just hope that NZ won’t head down the monopolistic food road that Australia has hurtled down.


UPDATE: my great mate in the Caribbean pointed me to an article in the Sydney Morning Herald. It’s about a gutsy move Fosters is making against Coles and Woolies, who are selling beer at AU$28 a carton, well below cost (normally selling for around $38.00). The two supermarkets control 50% of Australia’s liquor distribution. In the middle of the night, literally, Fosters stopped the delivery of tens of thousands of cartons of VB, Carlton Draught and Pure Blonde to Coles’ First Choice and Woolworths’ Dan Murphy’s chains. This is a plucky supplier taking on the giants. Gloves are off. I’ll be watching this space!
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