The Coles and Woolworths duopoly has killed Australian brands
For the fast moving consumer goods market to resuscitate itself in the face of the Coles and Woolworths duopoly, it needs to think long term and go back to brand basics, argues Troy McKinna.
Charles Darwin’s theory of natural selection has been playing out across the Australian FMCG sector for more than a decade, with many weak brands disappearing from our shelves. Some of our childhood favourites have gone: Polly Waffle, Sunnyboy, Tasty Toobs. Even big global brands such as Kraft have almost vanished from shelves in Australia. It’s been less ‘survival of the fittest’, and more ‘survival of the not so weak’. A lot of the brands that have survived are not as healthy as they once were.
Coles and Woolworths have had an aggressive agenda to strengthen their businesses, but it has been at the expense of their suppliers. To be fair, the two grocers have had their own challenges to deal with, including high stock market expectations in a relatively flat industry, and competition from each other as well as new entrants.
Arguably, the entry of Aldi, the German discount retailer, has had the most profound impact on the Australian grocery scene. Aldi’s business has more directly cannibalised the Metcash network of independents (including IGA), but it hasn’t stopped Coles and Woolworths from running scared.
I agree with the conclusions of this article but the premise that the growth of private label is driven by the Coles/Woolies duopoly is inaccurate – it’s a global trend and Australian grocers are actually behind the curve
We’re on a par with US retailers with private label sales of about 18% whereas across Europe the average supermarket sales is approx 30% comprised of private label products, rising to over 40% for Spain and the UK.
Aldi don’t release sales figures but my guess is that they’re far higher than Coles and Woolies and they are potentially more damaging in the sense that they source their private label products via global deals that drive prices even lower and more often bypass local producers and suppliers
Don’t Know much About Inter-Continental Food Chains, etc. But you’ve given Interesting Insight to!
When Bunning’s Hardware in Wesfarmer’s UK Branches looked-like Liquidating Due to Massive Losses etc. W/Farmer’s Dir. were Considering Selling Off Coles Supamarket Chain!!! NationWide!!!
Woolworth’s Operates on Premise of High Turn-Over/ Low Profit Margins. BOTH Woollies & Coles Operate on this Accounting Concept. Both of Their Main Profits are from Otha Diversities within each Corp! Woolie’s Listens ? To Customer… Aldi/ Cole’s only Care about ANYTHING Except $$$!!!
Nick, I’d expect better from you! Agree wholeheartedly with your commentary on private label. However, check the details. Aldi deals primarily with Aussie suppliers, as the quality is better and it is the preference of shoppers here.
I’d argue that lack of genuine innovation and a desire to maintain unrealistic profit margins explains the death of FMCG brands. Why would I pay more for the same stuff?
hmm, didn’t know that about Aldi in Australia. I’d read that internationally they sourced a lot of their products globally. Makes sense re Australia not only because of customer preference but also because of our distance to international suppliers
Luckily in South Australia we have a strong chain of Foodland stores which stock many local products, plus always have more staffed checkouts, have innovative shopping experiences and seem to have more motivated staff.
Please bring Foodland to Sydney
Been Woolworth’s Customer for 50yrs!
“Fresh-Food People” who’ve Always Cared About Numerous Uno – La Customer!!!
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I just think Coles and Woolworth are greedy I am just an ordinary person trying to survive Like my friends we noticed that a lot products that was Australia made are taken off the markets now Coles and Woolworth are forcing us to buy what they put on the shelves and not we want All they care about is their own pockets and not the people and Australia brand We are forced to be like America Australia is not a free country anymore
Totally agree so sick off it.i can’t find hardly anything these days besides there own generic brands, which started out cheap years ago and now they have overpriced other brands.i wish
a supermarket would come in to cut them out of business.
Please. The Kraft brand disappeared because Bega’s licensing deal with Kraft US over the brand name ended. If you’re gonna use examples to prove a point, at least make sure they’re right.
Very true, but isn’t that marketing ha? To just throw out some info and see if sticks
When are reporters, industry groups and our MPs going to stop throwing mud at the supermarkets and wake up and fix the big problems killing the dairy industry: a mismanaged murray water system in which prices have risen ten fold in the last six years, tariffs that put us at a trade disadvantage of more than 20% be NZ in key Asian markets like China japan Korea Taiwan, lack of investment in rural transport logistics and roads, an out of control processing sector continuing to artificially deflate farm gate prices by keeping key plants in dairying regions closed, lack of support to the few small brands having a go in China….
Weve been asleep at the wheel while the industry has crumbled in front of us. Why don’t you go and write a proper piece on what’s really going on rather than this rubbish that gets reposted and read by thousands of farmers and leaves them with one more thing to be unnecessarily angry and depressed about.
When you shop at Coles mostly you can only find their own brand take for example arnotts biscuits they have a very poor assortment to choose from but isle is full of Coles home brand biscuits
Woolies Do you have a better selection of Australian brands
First of all, this was kinda hard to read.
Woolworths and Coles are going to look like Netflix and its Originals. It’s a horrible thing but in a way, natural. Unlike Netflix though, supermarkets are very different and have consumable goods that you can buy again and again. With Netflix, once you’ve watched everything you want, you can just switch to another streaming service or see if they introduce new content that you like. And so that’s why we won’t see competition for Coles and Woolworths. Consumers have no need. Prices and quality will be what consumers will look for. Coles and Woolworths already gauge prices just like the petrol industry and while it’s widely known to those who care about prices, most people don’t seem to know. They also do price creep then discount.
It’s kind of funny to see some staunch Woolworths and Coles supporters here. My family shops at both. It depends on prices, brands and quality. Woolworths tends to have more discounted stuff though and it’s branding is so much better than Coles’. My family has shopped at Also but it’s not where we go often. We’ve also shopped at IGA but we have to drive further than the other three. We buy fresh produce from the local market.
And as Kurt said, Kraft didn’t “die”. I totally agree with what Bibby said but this is also important.
Anyway, the only thing that can be done about the lack of Australian made goods is to get the government to enforce it. So people, please vote wisely.
And I just remembered something else. While we’re talking about Woolworths and Coles, I want to mention that they are on their way to no assisted checkouts. It removes jobs. McDonald’s and other fast food restaurants are doing the same. Just another reason that the minimum wage shouldn’t be increased. The future – no – present of jobs, is bleak.