The global food system, according to a recent IPCC report into climate change, is responsible for between 21 and 37 per cent of the world’s human-generated greenhouse gas emissions – not a small burden – and the F&B sector is under huge pressure to allay concerns.
Some of this pressure comes from customers, and often focuses on the use of plastic. That comes as no surprise with 78 million metric tons of plastic packaging is produced globally every year and not a small proportion of that ends up in the open environment, where it will fragment into microplastics and lie or float around for decades before it biodegrades, according to Michael Stephen who chairs the OPA (Oxobiodegradable Plastics Association).
“While these concerns are understandable, they do not always lead to responsible decisions,” said Stephen. “Pandering to ‘plastiphobia’ may be one of them. Indeed, a recent UK survey by the Green Alliance found that major brands in the FMCG sector are switching away from plastic regardless of the environmental impact of substitute materials.”
The survey also showed that customers often harbour a deep-seated emotional bias against plastic – one going as far as to describe it as “evil and has no place, regardless of any positives it might have in addressing food waste and what not…”
“This demonisation of plastic appears to be motivating supermarkets to take decisions knowing they could increase rather than reduce environmental burdens,” claimed Stephen. “FMCG retailers should remember that plastic is not only the best material for protecting our food from contamination and preventing food-waste and disease, but it has a much lower global-warming potential than other materials used for packaging, according to LCA’s cited in the report.”
Plastic does not cause any depletion of fossil-resources; it is made from a by-product of refining oil, which is extracted to make fuels, and would be extracted whether plastic existed or not. When the plastic becomes waste and if unsuitable for mechanical recycling, its calorific value can be used to generate electricity if it is sent to modern, non-polluting, thermal-recycling units instead of to landfill
“The only problem with plastic is that it can lie or float around for decades if it gets into the open environment, but this is a problem which can be solved without depriving people of the benefits of the material,” said Stephen. “The scientists who invented plastic designed it to be durable, but they soon realised that this very durability causes a problem if the plastic gets into the open environment as litter. They therefore found a way to make the molecular structure of plastic dismantle automatically by oxidation much more quickly than ordinary plastic, when it had served its purpose. The plastic would then be biodegradable, and they called it oxo-biodegradable plastic. This has now been used and tested all over the world for many years.
“Contrast that with the alternatives. Some supermarkets are shifting to paper, but the report cautions that paper bags have much higher carbon impacts. Also, refillable containers can dramatically reduce the useful life of some products.
“Also problematic is the use of ‘compostable’ plastics. By 2025, Australia aims to ensure that 100 per cent of its packaging is reusable, recyclable or compostable, but “compostable” plastic, will only worsen the problem as, by definition (standards: EN13432 and Australian 4736), it has to convert to CO2 not compost. The last thing the planet needs is more CO2
“It now seems that the industrial composters of Oregon, USA, don’t want it, and they have recently published nine reasons why. Also the City of Exeter, UK, has in the same month rejected compostable plastic and paper.”
The problem, according to Stephen, is not that there is insufficient plastic going into industrial composting but that too much plastic getting into the open environment. “Compostable” plastic does nothing to help in that regard, because it is tested according to EN13432 and Australian 4736 to biodegrade in the special conditions found in industrial composting, not in the open environment. By design, therefore, it is not a solution to plastic waste in the environment.
The Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against Woolworths Limited, alleging the supermarket giant engaged in unconscionable conduct in dealings with a large number of its supermarket suppliers, in contravention of the Australian Consumer Law.
The ACCC alleges that in December 2014, Woolworths developed a strategy, approved by senior management, to urgently reduce Woolworths’ expected significant half-year gross profit shortfall by 31 December 2014.
It is alleged that one of the ways Woolworths sought to reduce its expected profit shortfall was to design a scheme, referred to as “Mind the Gap”. It is alleged that under the scheme, Woolworths systematically sought to obtain payments from a group of 821 “Tier B” suppliers to its supermarket business.
The ACCC alleges that, in accordance with the Mind the Gap scheme, Woolworths’ category managers and buyers contacted a large number of the Tier B suppliers and asked for Mind the Gap payments from those suppliers for amounts which included payments that ranged from $4,291 to $1.4 million, to “support” Woolworths. Not agreeing to a payment would be seen as not “supporting” Woolworths.
The ACCC also alleges that these requests were made in circumstances where Woolworths was in a substantially stronger bargaining position than the suppliers, did not have a pre-existing contractual entitlement to seek the payments, and either knew it did not have or was indifferent to whether it had a legitimate basis for requesting a Mind the Gap payment from every targeted Tier B supplier.
The ACCC alleges that Woolworths sought approximately $60.2 million in Mind the Gap payments from the Tier B suppliers, expecting that while many suppliers would refuse to make a payment, some suppliers would agree. It is alleged that Woolworths ultimately captured approximately $18.1 million from these suppliers.
“The ACCC alleges that Woolworths’ conduct in requesting the Mind the Gap payments was unconscionable in all the circumstances,” ACCC Chairman Rod Sims said.
“A common concern raised by suppliers relates to arbitrary claims for payments outside of trading terms by major supermarket retailers. It is difficult for suppliers to plan and budget for the operation of their businesses if they are subject to such ad hoc requests.”
“The alleged conduct by Woolworths came to the ACCC’s attention around the time when there was considerable publicity about the impending resolution of the ACCC’s Federal Court proceedings against Coles Supermarkets for engaging in unconscionable conduct against its suppliers,” Sims said.
The ACCC is seeking injunctions, including an order requiring the full refund of the amounts paid by suppliers under the Mind the Gap scheme, a pecuniary penalty, a declaration, and costs.
These proceedings follow broader investigations by the ACCC into allegations that supermarket suppliers were being treated inappropriately by the major supermarket chains.
IGA Romeo’s Food Hall at the MLC Centre will today open its doors to customers, providing a shopping option in the heart of Sydney’s business district.
The 1000 sqm boutique supermarket is located beneath the MLC Centre’s ‘new look’ food court and will operate seven days a week from 6am to 10pm, for the convenience of shoppers.
With an approximate fit out cost of over $2 million, The Romeo Group has tailored its newest supermarket to inner city consumers, providing quality and fresh produce, all at great value to the customer.
Joseph Romeo, store owner of IGA’s Romeo’s Food Hall, said he expected to attract city workers, commuters and local residents and looked forward to bringing his 30 years of supermarket experience to Sydney.
“It is important that our new store meets the needs of busy commuters and whether looking for quality take home meals, fresh produce or staple grocery lines, they will find it all at one convenient location.”
“IGA Romeo’s Food Hall will include premium features such as a bakery that produces fresh bread, a cheese bar with a resident connoisseur and a premium meat and fish section. We are confident the most discerning of foodies will find everything they need at our supermarket,” Mr. Romeo said.
Metcash Chief Executive Ian Morrice said IGA Romeo’s Food Hall at the MLC Centre epitomises the value independent retailers can deliver through a tailored offering.
“The Romeo Group has achieved great success in the South Australian and New South Wales markets and with their industry knowledge, competitive prices and unique offering we expect them to replicate this in Sydney’s CBD.”
According to a number of media reports, Coles has lost Round 1 in its Mexican standoff with Campbell Arnott's, with the supermarket giant accepting price rises on dozens of products after the biscuit maker held its much-loved Tims Tams hostage.
Campbell Arnott's warned Coles earlier this year that due to increased production costs, it planned to lift its prices by between two and 10 per cent on a range of common biscuit snacks, including Tim Tams, Scotch Fingers, and Monte Carlo biscuits.
In what could only be described as crumbling in the face of a more powerful brand, Coles had little choice but to accept Arnotts's demands.
A Coles spokesperson said: “Coles has made a commitment to bring down the cost of shopping for our customers, and we have been doing that every year for the past six years.”
“So when a major international manufacturer decides they will unilaterally force through a price hike without justification, we will resist that.”
This chocolate-encrusted standoff lasted for almost two weeks before Coles caved in and agreed to pay an increased price on 44 Arnott's biscuit lines.
However the bean counters at Arnotts didn’t have it all their own way as Coles has refused to pay more for 14 other products, which have since been removed from its shelves.
This includes six varieties of Tim Tams, including a range of flavours designed by Adriano Zumbo as well as other well-known Arnott’s biscuit varieties.
“Our average family shopper spends around $150 per week on food and groceries, and they don’t have the spare cash laying around to give to Campbell’s-Arnotts every time they decide to put their prices up,” noted the spokesperson in an attempt to explain this move.
So while Arnott’s may have won this round, the fact remains that Coles has also used the power of its brand and shelf space to show the biscuit maker that it will not tolerate being held to ransom.
The deleted biscuit lines are:
Tim Tam Zumbo Coconut Cream 165 gram
Tim Tam Zumbo Choc Raspberry 165 gram
Tim Tam Zumbo Salted Caramel 171 gram
Chocolicious Tim Tam Multipack: Caramel 191 gram
Chocolicious Tim Tam Multipack: Dark 187 gram
Chocolicious Tim Tam Multipack: Original 187 gram
Twisted Faves Monte Carlo: Salted Caramel 250 gram
Twisted Faves Shortbread: Strawberry Cream 250 gram
Arnott's Chocolate Biscuits: Royal Dark 200 gram
The massive fragmentation of consumers’ beliefs about health is contributing to the break-up of traditional food and beverage markets and opening the doors of opportunity for start-ups and small brands, says Julian Mellentin, director of New Nutrition Business and author of 10 Key Trends in Food, Nutrition and Health 2016. “Big food companies are being forced to rethink their business models,” he says.
The great fragmentation explains how high volume opportunities are scarce and becoming scarcer. In some markets they may already be history, said Mellentin.
Just as the person who listens to Bach’s Goldberg Variations at home also listens to Aerosmith or Black Sabbath while driving to work, people’s ideas about food and health have become a menu of choices from which they select and change as new information becomes available. We’re all food explorers now, looking for novelty and variety.
This is producing a proliferation of niches that smaller companies and new brands – often premium – are perfectly placed to serve.
In the future, smart companies will only rarely launch mass-market brands aiming to rapidly get high volume. Instead they will build portfolios of small brands, finely targeted at an ever-more fragmented consumer market. A few of these will become big brands, some will be big niche, most will remain niche.
The report gives the example of US giant General Mills as one of the few larger and more visionary companies already embracing the change. It has set up a new business unit – called 301 Inc. – to invest in entrepreneurs and early stage food companies.
“The rapidly evolving consumer landscape is dramatically changing the game in the food industry,” said John Haugen, general manager of 301 Inc. “Tremendous opportunity exists…to partner with and foster emerging food brands.”
Nonetheless, Australia’s city foodbowls are at risk of urban development, and the opportunity to develop them as climate resilient foodbowls could be lost unless their value is recognised in metropolitan planning policy.
As the impacts of climate change are felt in Australia’s regional foodbowls, urban and urban fringe (or “peri-urban”) areas of food production around Australian capital cities could become more important sources of fresh foods. Cities have access to resources that are in increasingly short supply, such as water, fertile land and organic waste streams that can be composted to provide fertilisers.
Australia’s city foodbowls
These urban fringes are not widely-recognised as “foodbowls”, but historically they have been an important source of food. Like many world cities, they were typically founded in fertile areas with good access to water. This fed their growing populations.
Cities such as Melbourne and Sydney are fed from a variety of sources – regional, national and global – as well as local. All are important, but urban and urban fringe food production has the potential to increase the resilience of a city’s food supply in a number of ways. These include reducing the dependence of city populations on distant sources of food, and maximising the use of limited natural resources.
If Australia’s capital cities are able to accommodate growing populations in a way that contains urban sprawl and retains their capacity for food production, city foodbowls could contribute to a food supply more resilient from climate change.
Foodland Supermarkets will build 22 new stores across South Australia and develop a major new warehouse/distribution centre as part of a five year $200 million expansion program.
Speaking before the Foodland 2020 conference to be held this Friday, Foodland’s Chief Executive Officer, Con Sciacca, said the new stores would create an additional 2600 jobs in the retail sector and further consolidate Foodland’s position in the South Australian market.
Up to 25 per cent of Foodland’s existing 118 stores will also undergo refurbishment, generating an additional 200 jobs as the group gears up to increase its offering to all South Australians.
“New store locations have been identified and construction has already commenced on a number of sites, including McLaren Vale, Salisbury East and Mawson Lakes,” Sciacca said.
“New outlets will also be opening in country areas as part of our state-wide commitment.
“This will generate more jobs for South Australians in the retail sector and provide additional opportunities for local food producers and growers.
“It’s about building on our already strong Foodland brand, a South Australian icon and one of the State’s most trusted names.
Foodland is recognised by Roy Morgan as having the most satisfied customers in Australia between January and August 2015 and was also ranked second as the most valued supermarket brand in Australia for 2014 by Canstar.
Sciacca said the new stores would range in size from around 4000 square metres to around 1000 square metres.
“Many of these will match or exceed the standards already set by existing stores at Golden Grove, Norwood, Mitcham, North Adelaide, Frewville and Woodcroft which have all won the IGA International Retailer of the Year award in recent years as the best supermarkets globally for the International Grocers Alliance network,” he said.
“Foodland differentiates itself in the market by its strong commitment to South Australian and Australian producers, meaning our stores frequently stock brands the other major supermarkets do not.
“All our supermarket owners are South Australian so profits also remain in this state, while we have an unmatched commitment to service and the local community which means quicker, better service for our customers.”
Foodland presently has about 32 per cent of the supermarket retail share in South Australia, the highest state market share for independent supermarkets in Australia.
The new warehouse/distribution centre will be built in conjunction with Metcash and will help facilitate Foodland’s ongoing growth.
Foodland will also be launching a major new advertising and marketing plan in coming weeks.
Consumer advocacy group Choice has released its latest research highlighting consumers’ desire for a strong and meaningful free-range egg standard in Australia that would recognise the need for hens to regularly go outside, have room to move inside and outside, and for farmers to undertake animal welfare practices.
The consumer group is calling for producers who fall short of consumers’ expectations to label their products in a way that accurately reflects their production practices, for example ‘access to range’.
“Consumers have a firm idea of what they believe free-range to mean and they want a standard to reflect these expectations. Creating a new category such as ‘access to range’ will provide consumer choice and confidence while catering to different production models,” said Choice spokesperson Tom Godfrey.
The Choice research found that consumers believe it is important, very important or essential that the following elements are included in a standard:
• 87% said that birds actually go outside regularly.
• 91% said that birds have room to move comfortably when they are outdoors.
• 89% said that farmers undertake animal welfare practices in the production of their eggs.
“With free-range eggs costing almost double than caged, the purpose of a standard for free-range eggs should be to give consumers accurate information so they can decide whether they wish to pay a premium,” Godfrey said.
“A standard should not be used to shield producers who might be misleading consumers.”
“With no national standard for free-range eggs, consumers are getting ripped off. Earlier this year, we found that a minimum of 213 million eggs were sold as free-range in 2014 that didn’t meet consumers’ expectations of free-range.”
“It’s time to stop big egg producers cashing in on consumers’ desire to buy eggs that meet a higher standard of welfare without delivering a product that meets these claims,” said Godfrey.
Choice also noted that some egg producers are actively lobbying through this process for a standard that sets a lower benchmark for free-range production than the definition established through case law (which is that at a minimum, most chickens go outside on most ordinary days).
Rather than broadening the definition of free-range to accommodate big egg producers, consumers (62%) think that producers whose products fall short of a free-range standard should be able to label their products in a way that accurately reflects their production practices, for example ‘access to range’.
“Importantly, this approach will provide certainty for those large-scale producers who might be at risk of misleading consumers. Instead of remaining at risk of ACCC action or having to change their production practices, they can simply adopt more accurate labeling and give consumers genuine information about how their products are produced. That would be a win for consumers and a win for egg farmers, large and small,” Godfrey said.
Submissions to the government’s free-range egg labelling consultation process close on November 27 with the Government likely to make a decision on a standard in February next year.
Decades of public health messages have encouraged us to drink milk to strengthen our bones and reduce the risk of fractures as we age.
But dairy products have recently come under fire – and not just from paleo dieters and animal welfare supporters. Researchers have linked high milk intakes to bone fractures, cancer and premature ageing.
Only last month two research reviews, published in the British Medical Journal, reported that calcium supplementation and dietary calcium intake didn’tsubstantially reduce the risk of hip fractures or increase bone mineral density in adults aged over 50 years.
We would love to give a definitive answer on whether milk is healthy or harmful, and whether you should include it in your diet. But the reality is, it all depends.
It depends on how much and what kind of milk products you consume. It depends on whether you’re an omnivore or vegetarian. And it depends on your age and current health status. So, whether you’re underweight or carrying excess weight, elderly or convalescent, or have food allergies or intolerance.
Let’s look at whether the arguments against cow’s milk stack up.
1. Milk increases your risk of chronic diseases
The most recent reviews of the evidence have shown that drinking milk is not associated with increased risk of premature death.
Dietary calcium and dairy products are important for bone development up until the end of adolescence and for maintaining peak bone mass in adulthood.
But there seem to be few benefits for older adults, in terms of fracture prevention, neither for dietary intake or supplementation. There are also possible adverse effects from too much calcium, such as kidney stones, heart problems and gastrointestinal symptoms.
It’s important to keep in mind, however, that there are few robust clinical trials of the long-term effects, especially in the context of chronic disease. And milk intake can be vastly diverse (quantity and form). So it’s difficult to compare study conditions and provide definitive conclusions.
2. Cow’s milk is for calves and not for humans
Human breast milk is arguably the first food the human gastrointestinal tract is exposed to. It provides a large selection of vital macro- and micronutrients to promote growth and development of the newborn.
Cow’s, goat’s and other mammals' milk provide approximately the same selection of nutrients but in different ratios. Here’s how 100 millilitres of human milk compares with cow’s milk:
Protein: 1.2g (human milk) versus 3.1g (cow’s milk)
Fat: 3.6g versus 3.8g
Lactose: 7.8g versus 4.7g
Calcium: 30mg versus 120mg
Phosphorus: 14mg versus 91mg
Note the larger concentration of lactose in human milk, but the significantly lower protein, calcium, phosphorus and slightly lower fat concentration.
Lactose (the naturally occurring sugar found in milk) is broken down into glucose and galactose in the gut by an enzyme, lactase.
Lactase is present in the gut of babies but production declines after weaning in two-thirds of the world’s population. This is known as lactase non-persistence. The natural decline of lactase production is the basis for the argument that we’re not “designed” to continue to consume milk.
However lactase persistence (tolerance) is an inherited trait thought to be associated with dairy farming and has been identified in dairy-consuming populations around the world.
People with lactase non-persistence are largely lactose-intolerant. When these people consume milk, lactose remains unabsorbed in the gut, causing bloating (due to bacterial fermentation) and build-up of fluid leading to diarrhoea.
It’s worth noting that products derived from milk, such as yogurt and cheese, have significantly lower concentrations of lactose due to the yogurt and cheese making processes, so they may be well tolerated.
3. Milk accelerates the ageing process
Lactose is made of two simple sugars: glucose and galactose. When lactose is digested, galactose is absorbed and metabolised, resulting in the metabolite D-galactose.
Animal studies have found that D-galactose increases oxidative stress in mice and accelerates the ageing process in flies. Oxidative stress essentially means that the body’s antioxidant “capacity” (dietary antioxidants compounds and the body’s antioxidant enzymes) is less than than the amount of free radicals. This imbalance leads to oxidative damage and ageing.
These animal studies have prompted some scientists to argue that drinking milk accelerates ageing in humans, by increasing oxidative stress and inflammation from galactose exposure.
It is worth pointing out that human breast milk contains a much greater concentration of lactose – therefore galactose – than cow’s milk. If the link with increased oxidative stress was a possibility, it would have perhaps been observed earlier.
A subset of children, however, are born with the genetic disease galactosaemia. This is where the body is unable to metabolise galactose because it lacks one or more functional enzymes. The build up of galactose causes serious health problems. Total galactose (also present in other than dairy foods) avoidance is currently the only treatment.
4. Cut down on milk because it’s high in saturated fat
Milk and dairy products, especially full-fat varieties, are high in saturated fat. Two-thirds (68%) of milk fat is saturated fat.
Saturated fat has been suggested to increase concentrations of “bad” cholesterol in the blood and to increase the risk of heart disease.
For decades, dietary guidelines have recommended consuming low-fat dairy products to reduce saturated fat intake.
More recently, though, the evidence linking saturated fat to cholesterol production and to heart disease has been debated. Specifically, in relation to milk intake, the most recent literature review and a cross-sectional study suggested that milk intake was not associated with an overall increased risk of heart disease. And those consuming full-fat dairy were less likely to have metabolic syndrome (a condition that includes risk factors for heart disease and type 2 diabetes).
Recommendations to consume low-fat dairy products remain in the Australian dietary guidelines and are likely to be in the revised United States dietary guidelines, due to be released later this year. These recommendations are generally justified in the context of obesity, however, as fat contributes the greatest amount of energy of all macronutrients.
The quantity of milk consumed is important to consider in any case – a dash (40 mL) of full fat milk in a cup of tea or coffee will provide 1.6 grams of fat (1.1 grams of saturated fat) and 118 kJ of energy. A full fat milk “grande latte” will provide approximately 15 grams of fat (10.2 grams of saturated fat) and 934 kJ of energy.
5. Milk is a cocktail of hormones, pesticides and antibiotics
Food Standards Australia New Zealand (FSANZ) sets and tightly regulates food standards. All milk is extensively tested to ensure it meets these standards and is free from chemical and biological contaminants.
The penalties for farmers who breach these conditions are heavy, which act as an effective deterrent. Any cows treated with antibiotics (for mastitis, for instance) are identified and their milk discarded for the required length of time to ensure it does not become mixed with the farm bulk milk.
If a bulk consignment is shown to have antibiotic residues (even minute amounts), it is condemned in its entirety and the farmer receives no income.
Pasteurisation (heat treatment) destroys any disease-causing bacteria such as E. coli, listeria, Salmonella and Campylobacter that may be present in milk. These bacteria can lead to serious health problems and, in some cases, death.
In Australia, it is illegal to sell milk for human consumption that has not been pasteurised.
So is it bad or good for me?
The question(s) should probably be:
Do dairy foods suit my physiology?
Which dairy foods suit me best and how much of them should I include in my diet?
Are fermented or unfermented milk products more suitable?
If I don’t tolerate dairy foods, how can I receive the same valuable nutrients from other foods?
In addition to the nutrients mentioned earlier, milk provides vitamins A, B1, B2, B12 (and D when it has been added), potassium, magnesium, phosphorus, zinc and selenium, with concentrations varying according to the feeding quality of the animal.
Non-dairy, plant-based milk alternatives – such as soy, almond, oat, rice and coconut – have a different nutrient profile, and may be fortified to match dairy milk on certain micronutrients.
While robust clinical trials measuring the long-term health implications remain scarce, dairy consumption – and yogurt, in particular – is associated with greater diet quality, perhaps because it provides such a variety of target nutrients.
If they suit your physiology, milk and dairy products will help you meet your daily nutrient recommendations for optimal health.
Collectively, Australia’s supermarket and grocery stores and fuel retailing industries will generate an estimated $ AUD125.1 billion in 2015-16. Business information analysts at IBISWorld forecast that this figure will reach $AUD134.5 billion by 2020-21.
The traditional supermarket giants Coles and Woolworths currently account for more than 70 per cent of the supermarkets and grocery stores industry in Australia, and over 40 per cent of the fuel retailing industry.
Competitor Costco’s continued expansion has seen the bulk-buying retailer grow its share of supermarket revenue. According to IBISWorld industry analyst Brooke Tonkin, “the company already claims 1.2 per cent of this $ AUD88.1 billion dollar industry, with only seven stores.” Costco’s ongoing diversification into the fuel retailing industry is expected to increase competition, with the company’s low-price strategy attracting motorists, as customers have little brand loyalty in terms of fuel.
“The trading landscape for supermarkets and fuel retailing has changed considerably over the past three decades, with new entrants increasing competition, and changing consumer preferences creating new challenges and opportunities,” said industry analyst Brooke Tonkin.
Supermarkets and grocery stores once operated alongside specialist food retailers, but now compete fiercely with specialist retailers on price and product range in a bid to attract shoppers. Industry retailers like Coles have recognised the importance of price competition by implementing substantial price cuts across their stores. Consumers have become increasingly price-conscious, and want to be assured that they are purchasing value-for-money goods.
Sales volumes generally remain relatively static for supermarkets, as shoppers tend to buy similar goods from week to week. As a result, price cuts have a significant effect on profit margins. To combat price competition and maintain profit margins, Woolworths has been forced to reduce costs.
“While supermarkets continue to compete on the basis of price, other factors such as convenience, product variety and quality have emerged as driving forces in securing customer loyalty. This helps explain the growth of Costco, which has steadily gained market share over the past five years,” Ms Tonkin added.
The Costco model
Convenience has become a major factor in attracting customers, with major supermarket players attempting to broaden their ranges to include basic necessities as well as specialist gourmet products. Meanwhile, Costco is attempting to increase its market share through the opening of new stores, and the sale of a diverse range of products in bulk. The expansion of new stores has been a major driver of ALDI’s growth, and similar success is expected for Costco, as the number of stores is a key competitive factor.
Costco offers a much wider range of products than the current supermarket duopoly at its seven Australian stores, including clothing, televisions and other appliances. Costco’s bulk-buying power allows it to offer very low prices. The wholesaler is able to offer such large discounts on its products and remain profitable due to its annual membership fee of $AUD60.
The majority of the company’s profitability comes from this fixed source of revenue, allowing it to pursue aggressive price competition. Costco’s earnings before interest and tax have only shown positive results once in Australia since 2009, indicating that the company is primarily focused on gaining market share in Australia. The membership fee also helps foster customer loyalty.
Store location is also important, and Coles and Woolworths have attempted to broaden their reach by expanding fuel station grocery offerings into mini supermarkets. “Costco’s expansion into fuel retailing is in line with this trend, as the wholesaler plans to become a convenient one-stop-shop where customers can buy all their groceries and fill up on petrol in the one location,” Ms Tonkin explained.
The fuel retailing industry faces a high level of competition, as price and location largely determine where motorists buy petrol. “Most consumers see petrol as an undifferentiated product and therefore purchase on price – there is effectively no brand loyalty,” Ms Tonkin said.
The Costco fuel retailing strategy offers customers convenience and consistently lower prices, in line with the company’s grocery strategy. Costco’s establishment of a Moorabbin store with fuel pumps is a first in Victoria.
The first Australian Costco fuel station was established in Liverpool, NSW, in November 2013. The introduction of a fuel station at the Brisbane North Lakes store in May 2014 prompted a flurry of price cutting in the surrounding area, as other fuel retailers scrambled to compete with Costco’s low prices.
However, Costco’s fuel prices remained lower than other retailers in the city, with customers saving up to 15 cents per litre. In the months following its opening, competition from Costco has continued to force down prices among other petrol stations in the area.
The way forward
As ALDI and Costco continue to expand in the supermarkets and grocery stores industry, the well-established major players are expected to look for new ways to remain competitive and boost market share. Woolworths announced in September 2015 that it would invest $AUD65 million in store improvements and increasing staff hours. Meanwhile, Coles has already begun upgrading some of its larger stores to a new market-style format.
“These strategies are designed to keep shoppers instore for longer by presenting stores as foodie destinations, and attract greater sales through premium offerings such as ready-made meals and delicatessen products,” said Ms Tonkin.
These new stores also offer patisserie goods, artisanal breads and even sushi bars. However, major competitor ALDI is also transitioning its stores to a market-fresh approach, with more fresh food, branded groceries, and ready-to-go and organic food. This is expected to further increase supermarket competition.
Frosty Boy Australia has released a do-it-yourself recipe book, giving retailers a great new option to expand their beverage menu.
The invaluable resource showcases 85 decadent and indulgent beverages, including a Gingerbread Frappe, Coconut Cherry Yoghurt Smoothie and an Almond Mocha Latte.
As well as the easy-to-read instructions that can be found in the recipe book, Frosty Boy has produced a library of short step-by-step video tutorials demonstrating how to make some of the most exciting beverages.
The Art of Blend is a range of versatile beverage powders that offer endless flavour and menu offerings, which can be served hot, cold, and icy to cater to every customer’s taste.
Since its launch in September 2014, The Art of Blend range has been a huge hit for Frosty Boy, with more than 80 per cent of their customer opportunities coming from their beverage ranges.
Felipe Demartini, General Manager Sales and Marketing for Frosty Boy Australia is excited for how the recipe book will empower beverage retailers to customise their menu versatility.
“This resource will prove invaluable for those in retail and hospitality looking to get a foot over their competitors and is full of practical recipes to help you get started,” he said.
“In using The Art of Blend range, our customers can provide an exquisite, quality product to their own consumers, without the burden of expensive equipment.”
“The Art of Blend range is a great option for retailers looking to expand or diversify their beverage offerings, and now that’s easier than ever!”
The Australian Competition and Consumer Commission’s chairman has criticised major supermarket chains over their implementation of the voluntary grocery industry code of conduct.
The Australian reports that chairman Rod Sims has said Woolworths and Aldi had continue to pressure suppliers, ahead of the Australian Food and Grocery Council’s Industry Leaders Forum today.
“It is unfortunate that the major retailers haven’t got off to a great start in implementing the code,” The Australian reports Sims as saying.
The code was launched in July, and aimed to bring in a truce between suppliers and retailers.
“The ACCC had concerns that some retailers, particularly Aldi and Woolworths, were presenting new supply agreements in a way that might give the impression that suppliers are not able to negotiate the terms of the agreement,” Sims said.
“We have also had concerns about the low level of detail provided in some supply agreements about the circumstances in which retailers can require certain payments. We have written to these retailers expressing our concerns.
Fairfax reports that the ACCC will not be pushing for a mandatory code of conduct, though said early-stage feedback suggested the major chains had not negotiated in good faith.
"They won't stop trying to screw down on price," an unnamed industry representative told The Sydney Morning Herald.
"But at the same time some of the practices of the past don't seem to be there."
The Australian Competition and Consumer Commission has reassured the Australian Food and Grocery Council (AFGC) that it will do what it can to ensure the Council’s Code of Conduct succeeds.
At an industry forum held in Canberra, ACCC Chairman Rod Sims said that the Code can redress the imbalance in bargaining power existing between suppliers and large grocery suppliers.
According to Mr Sims, “Ensuring suppliers are aware of their rights is crucial to the success of the Code. Our public action was designed to help with this.”
Plans to increase focus on the agricultural sector were also outlined, with further discussions to be held concerning the proposed changes to the country of origin labelling regime and the role of regulators.
ALDI Australia is commencing recruitment for almost 400 new positions across Western Australia, as it prepares for statewide expansion in 2016.
From today, ALDI has opened applications for Store Managers and Assistant Store Managers. Other roles including Trainee Store Manager and Store Assistant positions will open from December 12.
“As one of the country’s fastest growing retailers, ALDI is looking for dynamic, enthusiastic and ambitious people to help bring the ALDI difference to Western Australia,” said Viktor Jakupec, ALDI Managing Director – Western Australia.
“ALDI employees are highly motivated and dedicated to delivering the best shopping experience to our customers. In return, they are provided with rewarding careers, development opportunities and industry-leading employment benefits.”
As part of its commitment to staff, ALDI offers paid maternity leave (18 weeks at half pay), five weeks annual leave for full-time employees and salaries that are well above industry standards.
New employees will undergo extensive training to learn the ALDI way of doing business. West Australian Store Managers and Assistant Store Managers will also receive in-store training at one of ALDI’s existing stores on the eastern seaboard.
“Our commitment to the personal development of ALDI employees starts from day one,” Jakupec said. “ALDI’s training program sets our employees up for career success. We’ve enjoyed seeing our staff grow alongside our business and independent employee surveys have consistently shown high levels of job satisfaction.”
As ALDI’s West Australian expansion continues to progress, confirmed locations of interest include Nedlands, Lakelands, Belmont, Australind, Mandurah, Cannington, Camillo, South Lake, Haynes, Halls Head, Wattle Grove, Lakeside Joondalup, Midland, Rockingham, Ellenbrook, Southern River, Busselton, Kwinana, Maddington, Mundaring, Secret Harbour and Waikiki.
Consumer advocacy group Choice has welcomed today’s start of consultations on free-range egg labelling as the next step in ending the ‘free-range’ rip off.
Choice says that the consultation paper, released by the Hon Kelly O’Dwyer MP on behalf of the nation’s consumer affairs ministers, paints a clear picture of the current free-range farce and identifies options for unscrambling the problem.
“As the consultation paper shows, an increasing number of Australians are paying a premium for eggs labelled free-range without having any certainty they’re getting what they pay for,” said Matt Levey, Choice Director of Campaigns and Communications.
“In the absence of a national, enforceable standard for free-range, it is relatively easy to mislead consumers, and unfortunately there is a financial incentive for some producers to do so. The result is that consumers lose, as do producers of genuine free-range eggs,” Mr. Levey said.
The consultation follows a Choice investigation in June this year estimating a minimum of 213 million eggs sold in Australia last year under the 'free-range' label failed to meet consumers' expectations of the free-range claim.
“Based on consumers’ expectations, it’s estimated Australians could be paying between $21-$43 million per year for eggs that aren’t the real deal,” Mr. Levey said
“It’s a rip-off that distorts the market and undermines competition, and that’s why it’s so important that governments step in and agree a genuine free-range standard that reflects what consumers expect.
“Our research has shown that 84 per cent of egg buyers agree that a mandatory national standard is needed while only 2 per cent did not believe there should be a standard. Clearly it’s time to get cracking.”
With consultations open until 2 November, Choice is calling on consumers to support a genuine standard and contribute to a free-range information campaign.
"Support for the campaign has been overwhelming with consumers already donating almost $9,000 to send a message to government that they want real free-range," said Mr. Levey.
Woolworths has announced they will commit to eliminate food waste that is sent to landfill by 2020, and will begin a new partnership with Australia’s leading local food rescue organisation, OzHarvest.
The new partnership sees OzHarvest become the principal partner for Woolworths to collect and distribute edible food to people who are in need across Australia.
Woolworths will engage their network of farmers, producers, manufacturers, employees and customers to help minimise food waste as well as supporting OzHarvest’s educational campaigns on food waste reduction, such as Think.Eat.Save, an initiative partnered with the United Nations Environment Programme (UNEP).
The partnership forms part of a larger commitment by Woolworths to eliminate food waste, which includes seeing edible food waste distributed by a number of organisations like OzHarvest, and other waste used for animal feed, commercial compost and power generation.
Managing Director of Woolworths Food Co, Brad Banducci, said:
“Our customers want to see us reducing our food waste. We’ll do that right through the supply chain from selling our odd bunch imperfect fruit and vegetables to donating food through OzHarvest, our other food rescue partners, and other initiatives like animal food and commercial composting.
“Our target remains ambitious but with great partners it is achievable,” he said.
OzHarvest’s CEO and Founder, Ronni Kahn, was thrilled at the Zero Food Waste by 2020 pledge from Woolworths.
“This commitment from Woolworths is a huge advance in our collective fight against food waste. This partnership will allow OzHarvest to divert even more surplus food from landfill and further help Australians in need, addressing the broader issues of food waste, sustainability and food security.”
Ms Kahn said the charity was pushing for yearly waste to be cut by half by 2025.
“We must all take responsibility for the 4 million tonnes of food Australians send to landfill each year. Woolworths’ commitment to Zero Food Waste 2020 shows that they are serious about helping our environment as well as those in need. Now is the time for all Australians to get on board and reduce food waste!” Ms Kahn said.
The Australian Competition and Consumer Commission is investigating reports about the approach supermarket retailers are taking to implement the Food and Grocery Code of Conduct (Code).
ACCC Chairman Rod Sims said, “The aim of the Code is to redress the imbalance in bargaining power that can exist between suppliers and large grocery retailers by prohibiting certain types of unfair conduct”.
“The Code imposes a duty to deal with suppliers in good faith and we are concerned by reports we have received from suppliers that suggest that some retailers have not got off to a good start when it comes to implementing the Code,” Mr Sims said.
“The ACCC has concerns as to the manner in which some retailers, in particular Woolworths and Aldi, are presenting new Grocery Supply Agreements (GSAs), which might give the impression that the supplier is not able to negotiate the terms of the GSA.”
“The ACCC is also concerned about the low level of detail provided in some GSAs about the circumstances in which certain payments may arise.”
The Code sets out a number of prohibitions on, for example, requiring a payment for wastage that occurs at the premises of the retailer. While it is possible for retailers and suppliers to opt out of such prohibitions, this can only occur if the opt outs are agreed, if the agreement sets out the circumstances in which the opt out applies and if the payment is reasonable in the circumstances.
“One of the purposes of the Code is to provide certainty to suppliers, who are often in a much weaker bargaining position when dealing with retailers. In order to provide that certainty, the ACCC expects retailers to set out the circumstances in which they will seek payments from suppliers,” Mr Sims said.
The Code requires that retailers offer code-compliant GSAs. Suppliers should not feel compelled to sign these agreements and should seek advice before signing them. In particular, the Code will confer protections on suppliers 12 months after a retailer has signed up to the Code, regardless of whether a supplier has accepted a code-compliant GSA.
The ACCC said it has written to retailers about the manner in which they purport to be giving effect to the Code. The retailers have responded providing their new GSAs and the correspondence they have sent to suppliers offering the new GSAs.
The said ACCC said it will continue to monitor compliance with the code.
Fast food giant McDonald’s has been under a cloud in recent years as its US customers turn to alternatives. In this “Fast food reinvented” series we explore what the food sector is doing to keep customers hooked and sales rising.
Australia’s two main supermarket chains Coles and Woolworths' representation of “fresh” and “local” food reflects heightened interest among consumers about these values. But they also contribute to concerns about food production and the supply chain.
Both have employed celebrity chefs with a reputation for caring about such matters. When he joined forces with Woolworths, UK chef Jamie Oliver explained:
part of what I’m doing with Woolies is looking at standards, and ethics, of where our sort of food comes from.
But when pressed on the demands Woolworths had made for farmers to surrender some of their profits to pay for his campaign, Oliver said he was just an employee.
The problem is that his claims and the supermarket’s promotion suggest that standards and ethics – as well as the growers asked to fund messages about themselves – are well regarded by the public. This is due, in part, to the strategies of producers and small retailers that the two supermarkets have appropriated to win the custom of consumers who care where their food comes from.
Consider the case of Macro foods: the chain, rebadged as Thomas Dux, an urban store format, was a shift from the freestanding supermarkets established in the 1960s. When it was bought out by Woolworths in 2009, Macro founder Pierce Cody saw the sale of the chain as evidence of the work they put in:
to take organic to a large-format, mainstream model rather than little folksy corner stores.
The chain was used to test the market for Woolworths' privately labelled gourmet goods. And Coles has its own organic label.
The proliferation of privately labelled goods (which are made by one company for offer under another company’s label) has diminished the product range offered by supermarkets. Coles’ product range, for instance, dropped by 11% between 2010 and 2012.
Private-label items, produced in conjunction with specific suppliers, compete directly with other products in the range, dominating shelf space and usually offering a lower price. And this is only one part of the pincer movement reducing the number of suppliers.
Australia’s largest dairy company, Devondale Murray-Goulburn, may grow from the exclusive deal it has struck with Coles to provide milk, for instance, but in the process it reduces the number of milk suppliers in the market.
A fairer go for farmers
Supermarkets use the romantic image of the small family farm to play up their close relationship with farmers and suppliers. But it’s also employed in arguments for reforming the sector, because of the commercial disadvantage small family farms have in the domestic food system.
The Agricultural Competitiveness White Paper released earlier this year, for instance, recommends a new commissioner dedicated to agriculture and a more “farm savvy” Australian Competition and Consumer Commission (ACCC) to encourage fair trading.
The aim is to strengthen competition in agricultural supply chains, which will engage the ACCC more directly with supermarkets. And the first priority is to help farmers achieve a better return for their produce. But this is only one sign that Woolworths and Coles face a political environment that is increasingly hostile to their sourcing policies (as well as growing consumer scrutiny).
The code of conduct for grocery wholesalers and retailers (Food and Grocery Code), for instance, discloses the existence of practices by grocery retailers and wholesalers in their dealings with suppliers, which motivated its development. It mentions “preventing a supplier from fulfilling obligations” by placing their products behind other competitors’ products on shelves such that consumers cannot see them, and “payment for wastage” that occurs at the retailer’s premises.
While the code fails to address the inequality of market power in the supply chain, it does reflect the challenging environment in which Australian farmers and suppliers now operate.
Marketing by supermarket giants highlights public interest in food production, supply and retailing. When Woolworths brought back its “Fresh Food People” campaign last year, the advertising featured a range of products from farm to store complete with “fresh food stories” of individual farmers.
But the UBS Supermarket Supplier Survey tells a different story; Woolworths' rating on quality of fresh food produce lags behind Coles.
Besides selling the brand of Woolworths, the marketing also appropriates the ideal of farming and relationships with suppliers to sell products. The company considered a “local” retail brand in 2013, in addition to its other labels such as Macro and Woolworths Select.
This suggests Woolworths still believes it can increase or maintain its market share with buzzwords despite how incongruous these sound coming from a supermarket giant. But while local might be more important to consumers than fresh, supermarkets are falling behind the innovations of local food producers to create a fairer food system.
Coming out on top
Supermarkets have tried to tailor their products to include organic, natural and local foods to meet consumer demand. But while Coles and Woolworths control 80% of the grocery market, they have 45.5% of the market in fruit and vegetables and 47.2% of meat.
The imbalance in market power favours the duopoly. But eaters are still choosing to buy their fresh food at local fruit and vegetable shops, butchers and farmers' markets. There, they can engage directly with the people who grow their food and not just see representations of them.
A survey undertaken last year on behalf of the Australian Farmers’ Markets Association, for instance, found that 14% of respondents typically buy their vegetables at a farmers’ market.
Supermarkets have stopped merely copying each other: from liquor to petrol to hardware. It’s clear from sales, from how they advertise and from consumer concern about food security and food sovereignty that what they really need to worry about is the combined agency of farmers and the power of consumers. Put together, the story isn’t so gloomy for the food sector.
Three Australian farming families will invest in innovation and help to replace food imports into Australia after being announced as the first-ever recipients of Coles’ $50 million Nurture Fund.
The Clark family from Westerway Raspberry Farm in Tasmania, the Wiese family from Yarranabee in Western Australia, and the Moon family from Moonrocks in Queensland were announced by Coles Managing Director John Durkan as the first recipients of Coles’ grants.
Westerway Raspberry Farm will become the first growers in Australia to adopt new freezing technology, which will allow them to supply Tasmanian frozen raspberries to customers on a large scale.
Yarranabee will build the first-ever large-scale quinoa processing plant in mainland Australia, which will enable them to process their locally grown quinoa at Narrogin in Western Australia.
Moonrocks will help to replace imports of garlic by growing and packing garlic in Queensland with new storage, machinery and equipment installed at their farm at St George.
David and Andrew Moon from Moonrocks at St George have received a grant, which will help them to replace imports of garlic at a time when Australian-grown garlic is not available to meet customer demand.
Speaking six months after he launched the Coles Nurture Fund to support small businesses in the food and grocery sector, Mr Durkan said the three local businesses were great innovators in the food industry and deserving recipients of the first Coles Nurture Fund grants.
“These three businesses are breaking new ground by supplying Australian customers with locally-grown products which are so difficult to source in Australia,” he said.
“We know Australians want to buy locally-grown produce and these first Nurture Fund recipients will use the funding to make this happen.”
Businesses with less than $25 million in annual revenue and 50 or fewer full-time employees can apply for the next round of funding from the Coles Nurture Fund as from September 25. More information is available at www.coles.com.au/nurturefund
Co-owners, The GPT Group and QIC, have announced that the MLC Centre will open an IGA Romeo’s Food Hall, which will complete Stage One of the MLC development and mark another milestone in the centre’s ongoing transformation.
The 1000 sqm boutique supermarket will open beneath the MLC Centre’s transformed food court, creating a convenient shopping option on Martin Place, in the heart of the CBD.
GPT’s Head of Investment Management for Office, David Burgess said the introduction of IGA Romeo’s Food Hall continued to build on the quality retail offer at the MLC Centre.
“We are just putting the finishing touches on the ‘new look’ MLC Centre food court and now we can announce the arrival of IGA Romeo’s Food Hall, within the MLC Centre and linked to Martin Place train station,” Mr Burgess said.
“It will deliver a tailored and highly convenient supermarket for CBD commuters and further build on the MLC Centre’s position as a focal point for eating, shopping and socialising in the city.
“This will round out Stage One of the development works for the MLC Centre and paves the way for the Stage Two retail development, which is due to begin in 2016, subject to approvals.”
Marked for completion in late 2015, the Romeo Group will tailor its supermarket offer to inner city consumers, with a focus on fresh meal solutions and healthy produce, all at competitive prices.
Joseph Romeo, storeowner of IGA’s Romeo’s Food Hall said the store has been designed to accommodate the changing demographic of the city – city workers, commuters, shoppers and residents living and socialising in the city.
“As a successful independent retailer we have been providing service, quality and fresh produce to Sydney shoppers for many years and IGA’s Romeo’s Food Hall is the next step up in retailing for the Group.”