Resistance to supermarket giants developing

Vanguard May 2012 p. 8
Duncan B.

 (Above and below: farmers' markets in Collingwood and North Melbourne)

Resistance is developing to the predatory activities of the two giant Australian supermarket companies, Coles and Woolworths.

At its recent annual conference, the WA Farmers’ Federation passed a motion to boycott Coles and all Wesfarmers (Coles’ parent company) subsidiaries, including Wesfarmer’s chemical, fertiliser and insurance companies.

The WA Farmers’ Dairy Council spokesman said an 8% reduction in milk production had resulted from Coles predatory pricing and cost the industry $25 million.

Consumers are turning more and more to farmers’ markets to obtain fresh produce directly from the growers. The number of farmers’ markets more than doubled between 2004 and 2011 from 70 to 152, accounting for 7% of Australia’s fresh food market.

Farmers are also setting up local-produce-only retail stores, using the internet to facilitate direct dealing between food producers and consumers, and establishing regional food hubs to bring produce from regional farmers to city consumers.

At present, these innovations pose only a small challenge to the giants, but public support could give them something to think about.

One food hub spokesman said that Coles is trying to reduce the number of suppliers from 500 to 20, forcing farmers to try and buy one another out.

Coles and Woolworths also dominate liquor retailing in Australia. Woolworths has 1300 outlets generating $5.9 billion annual revenue. Coles has 794 outlets for estimated revenue of $2.5 billion to $3 billion. The wholesaler Metcash is third, with 15,000 outlets for $2.3 billion revenue.

This domination means that the family-owned independent neighbourhood bottle shops are facing extinction. Many of them have to resort to buying their stocks from shops such as Dan Murphy’s as they cannot match the big boys on price. The loss of small liquor shops would make it harder for small wineries to build up their brand

as they cannot compete for space on the shelves of the giants.

Recently, two independent liquor store groups, Independent Liquor Group and Southern Liquor Group announced a merger that will create a network of 1600 outlets for $340 million annual revenue. This is chickenfeed compared to Coles and Woolworths, but means that the giants won’t have it all their own way and opens up more choices for suppliers.

Coles and Woolworths are leaning even harder on their suppliers to reduce prices. Even large companies such as Fosters, Heinz and Coca Cola are feeling the pressure and are complaining bitterly.

The likely result of Coles’ and Woolworths’ pressure on suppliers will be that more small food processors will be forced out of business when they can’t meet the giant’s demands for lower prices.

The price war between the supermarket giants is being blamed as one of the factors behind Metcash’s decision to close 15 Campbell’s Cash and Carry branches (which supply milk bars and small convenience stores) and get rid of 478 staff.

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For further information on opposition to the duopolies, this time by Australian-owned independent grocers, see the Fightback magazine: http://www.fightbacknews.com.au/