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Coles sales up 8 per cent

Sales for supermarket giant Coles rose by eight per cent in the first quarter, amid debate over the supermarket dominance in the Australian market.

Sales rose to $8.09 billion for the three months to September, Wesfarmers said in a statement.

In the same period last year, the supermarket’s sales were at $7.49 billion.

Wesfarmers has experienced growth in other sectors of its business, with home improvement and office supply sales up and Target down slightly.

The supermarket power of Coles and rival Woolworths has been blamed on the dire situation for Australian dairy farmers, after Coles reduced its milk price to $1 a litre and Woolworths had to follow suit.

While Coles was cleared by the ACCC for any wrongdoing in the incident, dairy farmers expressed their outrage at the decision and only last week it was labelled “unsustainable” for farmers to be selling milk for such low prices.

The Queensland Dairy Farmers Organisation (QDO) accused the ACCC of reaching premature conclusions, when it said Coles had not breached the Competition and Consumer Act 2010 in regards to its $1/litre milk discount.

“Milk priced at $1 per litre does not bring in enough money to support farmers, processors and retailers,” ADF president Chris Griffin said.

In August Heinz again slammed the marketing power of the big two supermarkets, saying Coles and Woolworths have created an “inhospitable environment” for suppliers.

The company’s chief financial officer and executive vice president, Arthur Winkleback told US analysts said the demise of many Australian companies can be attributed to the supermarket wars.

”This is, as many of our peers have talked about, a very difficult environment,” Winkleblack said.

”The reality is with two key customers there has become an inhospitable environment for grocery manufacturers.

"With it being such difficult market, we’re going to take the measures … to address that.

"We’ve seen our margins squeezed as the pressure comes on.”

The influx of supermarkets’ home brand products means many manufacturers have been forced out of the top spots on shelves and forced some to get on board by making products for the supermarkets to put their own label on.

Bega announced last month it will be supplying cheese for Coles’ home brand label.

While the quarter up to September was positive for Coles, the company has warned it may face a tougher environment around Christmas.

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