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Growers wary of price war
Coles says it plans to cut produce prices by as much as 50 per cent as it ramps up its battle for market share with rival Woolworths.
The price cuts will affect about a dozen core items each week, on rotation.
But growers fear that while the promotion might be good for consumers - and volume - growers are likely to lose out.
Grower body Ausveg, which represents some 9000 vegetable and potato growers, has labelled Coles’ plan “concerning”.
“While some vegetable growers stand to benefit from the significant discounting by Coles, Ausveg is asking the question of where these savings are coming from, and what effect this scheme will have on the greater viability of the industry,” the organisation said in a statement.
“With this new scheme being implemented not too long after the Woolworths fixed pricing scheme last year, we can see that the supermarket wars have well and truly arrived in the fresh produce industry and this fight will get savage,” said William Churchill, public affairs manager.
“The drive by the major retailers to capture market share will place an untold amount of pressure on many other growers who aren’t supplying Coles, as competitors try to replicate this kind of offer to their customers,” said Churchill.
“The scheme provides some select growers the opportunity to sell higher volumes of produce at a discount and still maintain a successful business - but not all growers are in a position to supply the enormous volumes required to make a profit from these discounted sales,” he said.
“The adverse impacts of this kind of campaign will become evident in time particularly for growers who are committed to supplying Woolworths, independent retailers or wholesale markets as customers shift to Coles stores. Ultimately, growers who don’t supply Coles will be left in limbo.”
“There are severe risks to producers, their businesses and their families all around the country from moves like this and it forecasts a disturbing price war where growers will be unable to sustain these sorts of discounts, running themselves out of business,” said Churchill.
“What the industry would like to see is some substantiated evidence that this sort of discounting is not adversely affecting Coles growers and be able to demonstrate the benefits of this risky promotion.”
Coles argues that by offering customers low prices on fruit and vegetables it expects to increase sales, providing a more certain market for Australian growers “who with such an abundance of product may otherwise end up having to leave some crops in the fields”.
Coles GM for fresh produce, Greg Davis, said quality fresh produce is the most important part of Coles’ offer to its customers.
“They rightly expect the very best quality but price is an increasingly important factor for many when choosing what to buy and where to buy it. We have worked closely with our growers to transform our fresh fruit and vegetables offer, investing in new growing techniques, quality control, in store displays and lower prices for customers,” Davis said.
“I am confident that the result for customers which we are unveiling today (Monday Jan 30) is the best quality, best value and freshest fruit and vegetables in Australia.
“I’m also proud of the fact that over 96 per cent of Coles’ fresh fruit and vegetables are Australian grown. We always source at home whenever we can and only look further afield when we can’t buy sufficient quantities of quality Australian product. And we try to be even more local by sourcing and selling locally grown produce within States wherever possible,” he concluded. |
Wednesday, February 15, 2012 by
The price "war" between the 2 major supermarkets will hurt suppliers and small business. Look at the free advertising they have recieved in all areas of the media which would have to reduce their costs. They only need to have the reinforcing advetising to get the message home. I only hope for the consumers sake that this price war continues long after the choice of an alternative business to purchase from is gone, because you will get what you pay for.
Sunday, February 05, 2012 by
I am concerned for where this will leave small business(the ones keeping the bastards honest) Will this approach be the sugar high that has consequences for the customer that may well leave a very bitter taste.
Time will tell, but will small business be able to endure. Add the impact of Fair Work on top of price reductions. Will the margins be eroded so much that the situation becomes unprofitable
Wednesday, February 01, 2012 by
Another marketing excercise by Coles to try and grab some attention and market shares.Fortunately our customers in Australia are more informed and will not be easily tricked into the short term gimmick and low prices.
Low prices equals low quality and they know where to shop besides Coles to get low quality produce at much lower prices.
Wednesday, February 01, 2012 by
Coles are going to stuff the small farmer that supply fruit and veg to wholesale markets. When these farmers are forced out of business along with your local fruit shop. When they have wrecked these farmers and fruit shops Coles will increase prises out of reach of the average person. This intern may cause a shortfall in local produce and give coles more reason to import cheap, inferiour fruit and veg from overseas.
Wednesday, February 01, 2012 by
There is some merit in Coles' argument as I get really annoyed when reading about Fruit and Veg being "dumped" or "ploughed in " because farmers can't get the price they want or because of "over supply".
Who knows, we may also see the price of FROZEN vegetables fall too (as a consequence).
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