Danes World

My views on the World, politics, comedy and other stuff.

Supermarkets are destroying the economy

There is a push from the two main supermarkets in Australia at the moment to remove named brands for substitution of their homebrands. If you don’t believe me check your local Coles or Safeway and look for some of the brands you used to know and try and find them. This may make your shopping bill slightly cheaper but at what cost? If this trend continues it will result in the loss of all that made Australia great, our quality of life will reduce drastically. Manufacturing jobs and food processing/growing/harvesting jobs will gradually decline. What can we do about it??? As consummers we simply have to ask for and demand Australian owned and produced products, if enough people regularly say to the supermarkets they won’t buy the imported crap but only want Australian brands, they will do it.

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September 13, 2006 - Posted by | Supermarkets

17 Comments »

  1. Great site, interesting topics. I’m never buying homebrand stuff again!

    Comment by allister | September 13, 2006

  2. what an attitude…..can u imagine what would happen to australia if the rest of the world said that they would not import australias minerals and resources any more, as its taking away thier local jobs???
    we live in a global economy. protectionism only encourage inefficiencies and stifles innovation. trade is the best foreign aid that we can provide developing countries. australia needs to become an innovator and find ways of competing globaly, not based on the chepaest costs or highest subsidies…..

    Comment by paul | September 14, 2006

  3. My wife was getting very animated about this in a discussion last night. Maintains that the whole face of supermarket shopping has changed in the past 18 months. I fear she and you are correct.

    Comment by block | September 14, 2006

  4. Actually Paul, your statement there is exceedingly dodgy on a number of counts – there is always going to be demand for things like raw resources. You can’t manufacture those. The debate between raw resources and manufactured items is vastly different.

    Take Japan for example. The population in general has a much higher knowledge on average of business practices and the importance of trade to the economy.

    I’ve lived there, and I know that very few Japanese would even consider buying foreign products. In supermarkets, Australian products languish when compared to their Japanese counterparts, who in many cases import the same basic ingredients from Australia, but manufacture it over there thus maintaining jobs.

    An atmosphere of free trade benefits the players who are already well established, and encourages the centralisation of management. Where once you have five companies in five countries, you have one, based out of America, Japan or Germany, which still has five labels, but the profit is funnelled into a single entity.

    Australia’s raw minerals and resources are never going to lose their markets. Everybody needs them. Australia’s problem, is that our economy resembles that of a third world country – we are heavily reliant on such raw materials, we are only more profitable because there are so few of us, and there is an abundance of material.

    Why is our economy this way? perhaps we can improve it a little if we buy local.

    Comment by Dave | September 14, 2006

  5. Yes I too have noticed this shift and it has nothing to do with providing choice and cheaper alternatives to consumers but all to do with increasin the bottom line of the supermarkets.

    It would cost the supermarkets less to stock fewer product lines and there is most likely a greater markup on the so-called premium homerange products which are almost exclusively from overseas.

    Comment by Russell | September 14, 2006

  6. The Govt and many people do not realise just how many people are employed by manufacturers that produced branded products! By switching to Coles and Woolworths brands, (and if they are successful) these jobs will be under threat.

    Thankfully some early data shows people are sticking with brands, but still a threat.

    Whenever I go into a supermarket I always damage packaging and rip off price tags (stops the supermarket from re-ordering) of all the Home brands! Gives me a little statisfaction

    Comment by Jake | September 14, 2006

  7. I’ve been noticing this more than ever at my local Coles. Where did Pura milk go? All that shelf space is now given over to “You’ll Love Coles Milk”, to give it it’s full title..

    Comment by Paul | September 14, 2006

  8. Funnily enough I have noticed that the foreign owned Aldi seems to go out of its way to stock Australian made – even for its house brands.

    Gawd help us if Walmart ever gets its greasy mits on Coles.

    Comment by Albert Ross | September 14, 2006

  9. Supermarkets such as Coles aren’t just in the business of selling food. They have just one goal only – to make as large a profit as possible. The top-selling product in supermarkets? Coca-Cola. http://www.smh.com.au/news/national/sartor-ignored-warning-about-smoking-ads/2006/03/16/1142098602817.html Out of the other 9 other topselling products, 6 are cigarettes. What’s the bet they don’t remove these named brands for substitution of their homebrands?

    Comment by Anne | September 14, 2006

  10. We won’t shop in Coles Oatley

    Comment by Oatley residents | September 14, 2006

  11. Some of the debate around Australian supply of housebrand product is misguided. Small Australian suppliers are actually advantaged by this trend.

    It costs a lot of money for Australian suppliers to retain space on supermarket shelves. The big companies dwarf small companies marketing efforts and the small guy is inevitably squeezed off the shelf because of lack of sales. Small suppliers don’t need to find that marketing overhead when suppying the same tomoto can with a Coles label on it.

    Australian customers should be encouraged to buy housebrand products which will continue encouraging small Australian manufacturers to supply great product at great prices.

    So Jake, think about what you’re doing to small Australian manufacturing when you’re vandalising their product.

    And Paul, your Pura Milk is now exactly the same milk, supplied by the same processor who still buys from the same Australian farmers – it’s just called something different and you are paying a $1 a litre less. The milk company now pays hundreds of millions less for marketing the Pura name so they retain their margin – and there is no further squeeze on the farmer.

    Everybody wins by supporting housebrand.

    Comment by Scott | September 15, 2006

  12. Yes Dave, your points are very valid, maybe my analogy was not the best, however, as a supplier to Coles and Woowlorths, I can say categorically that while their trend is to now support only a small number of brands, including their own, for those companies that can excel in the product category, Coles and Woolworths distribution is a company maker… Everyone can also bid to supply the private label products.
    I just dont see Australia’s future as a producer of produce that has very little value added… Thats the space that delevloping copuntries can benefit from in “regulated” free trade. Australia’s producers and manufacturers need to be innovators… Just look at what a great job new zealand has done in branding its dairy produce for sale into Australia for example…
    Personally, I look forward to paying less and less for my groceries. Professionally, I also work daily in innovation to ensure that I always maintain my place on Coles and Woowlorths shelves…
    And when i am looking for something a little special, I know my local gormet, or fresh food markets are there with products that Coles and Woowlorths cant provide…

    Comment by paul | September 15, 2006

  13. Paul, Scott; it’s interesting you say things like “Coles and Woolworths distribution is a company maker” – agreed, yes, but they can also be a company _breaker_. I could name, off the top of my head, at least a dozen brands that have disappeared from the shelves of Coles & Woolies, only to be replaced by home-brand products. There’s others – like Bulla, Rosita’s, Taj Roti Co. – who’s products are becoming harder and harder to find. At the moment, even bigger players like Inghams and Steggles seem to be locked in a battle over who supplies which supermarket chain – leading to supplies of both being spotty and unreliable.

    Now, if you’re in the game of supplying home-brand products, I can’t say the same for you. If your contract is dropped and replaced by products from a domestic or overseas competitor, the best you can hope for is that I notice a slight change in taste – and, maybe, a little curiosity along the lines of “I wonder what they did?” when I’m reading through the liquidations section of the newspaper public notices columns…

    Comment by Tex | September 15, 2006

  14. i agree with what you are saying here dane.
    As the main grocery shopper in my house hold i am finding very hard to get the brand i have always bought that are all australain made these spots on the shelfs are being taken up with woolworths select products and 90% are made overseas.
    but after reading this i will not buy these products as i want jobs to stay in our country for future generations .

    come on everyone think of our kids and grand kids and so on

    Comment by catherine | September 15, 2006

  15. Paul, it’s the small guy who can fill the innovation void. Struggling to compete against the big national/international marketers and satisfied that their is no future in housebrand unless it matches leading branded quality, the small guy focuses on doing it better and different for less. He markets some under his brand through one distribution strategy and housebrand through supermarkets to satisfy growing demand for value products.

    Research tells the supermarkets that a three branded and two housebrand product offer is preferable to customers than five of the same product with little price variation. With limited shelf space, Coles and Woolies are keeping the best three sellers and adding two quality, low cost alternatives. The Bulla’s, Rosita’s and Taj Roti’s of the world wouldn’t be disappearing if they were selling in the sort of volume their competition is.

    Coles and Woolies answer to their shareholders and, therefore, only offer shelf space to products which sell and which are often promoted (on sale) and which are supported by huge amount of marketing – another reason all suppliers should spend money on innovation instead.

    Comment by Scott | September 15, 2006

  16. Coles and Woolies still source Australian raw materials (because its cheaper) so when you say
    “Manufacturing jobs and food processing/growing/harvesting jobs will gradually decline”,
    that isnt actually true. Suppliers that originally manufactured their own brands are now being contracted to produce private label brands. So we are still buying Australian produced products ie it is not “imported crap”.

    According to Rabobank
    (http://www.rabobank.com.au/inside_rabobank/news/media_releases/media_release_161105b.asp)
    The upshot of all of this is that:

    “Private label seems unlikely to create growth opportunities for the food processing sector as a whole. Broadly speaking, food prices will fall, consumption will not rise, a greater share of margins will be passed to retailers and, at least in the short term, industry capacity utilisation will not increase.”

    So yes it sucks that the margins are being taken away from the smaller producers to pass onto multi-billion dollar companies but it is still being manufactured in Aus.

    Comment by Mr UniStudent DoingAnAssignmentOnThis | October 25, 2006

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    Comment by Loris Rahl | March 12, 2012


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