Fruit and veg price war – who benefits?

On Australia Day in 2011 the Coles supermarket chain slashed the price of milk. Coles claims that in the past year it has saved consumers $175 million. It has based this figure on savings across the Coles, Woolworths and Aldi supermarkets, claiming that the Coles price reduction forced the other major supermarkets to follow. So nearly a year to the day, on January 30, Coles has dropped the prices of fresh fruit and vegetables – striking at the heart of rival Woolworths’ positioning as the ‘Fresh Food People’.

Coles is promising to double the number of ‘Super Specials’ in store and offer best prices on fruit and vegetables such as tomatoes, apples, carrots and cauliflowers. Coles also states that this ‘freshness’ campaign is good news for Australian growers who, to quote from the Coles press release ‘with such an abundance of product may otherwise end up having to leave some crops in the fields’.

There have been some interesting responses to the Coles initiative. The president of the National Farmers’ Federation Jock Laurie pointed out that the announcement came on the same day that the United Nations released a report which warned that there is a high risk not enough food will be produced to feed the world’s booming population. Laurie went on to state that it is important for consumers to understand that a cut in fresh fruit and vegetable prices may be good for their hip pockets in the short term – but not very positive for farmers who are growing this produce.

And the Australian Food and Grocery Council entered the debate with a request for the government to appoint a supermarket ombudsman to enforce a fair trading code of conduct.

Read Kaye’s blog on this issue.
Coles press release
Australian Farmers Federation

What about you? Is this price cut going to make a difference in your life? Is Coles a force for good? Or is this just a short-term gain and will prices inevitably go up again?