Australians are increasingly seeking to make a difference by buying local

In response to the adversity of 2020, bushfires, floods, a pandemic, and economic downturn, Australians are seeking to do their bit at the grocery store. A recent study by Mintel, the experts in what consumers want and why, shows Australians’ desire to buy locally grown food is gaining momentum. According to Mintel’s Megan Stanton, senior analyst, Purchase Intelligence, “In July of 2019 Forty four percent of consumers said they try to buy locally grown food, this rose to forty eight percent after the December 2019 bushfires and rose again to fifty two percent during the COVID-19 crisis.”
There are many reasons for this marked shift in attitudes. Many consumers believe Australian products deliver on taste, quality and trustworthiness, and are seen as better value than imported products, however it depends on the food or drink category as well. “In categories where safety is an issue most respondents said they would buy a product locally made in Australia over a less expensive imported product.
For instance, frozen fruit grown and packaged in Australia significantly outperformed overseas products when it came to both instant reaction and purchase intent. Fifty-four percent of respondents were more likely to buy the Australian product despite its higher price tag.”
Safety, however, wasn’t the only reason respondents gave for choosing Australian made over imported brands. They also believe Australian products taste better and see the value in providing more opportunities to the local economy by supporting Australian jobs and farmers.
Transparency was an important factor for respondents. Many respondents to the Mintel survey expressed dismay that products they believe should be made in Australia, especially those sold under supermarket own-brand labels, are actually imported from as far away as Europe and the Middle East.
These findings align with the Mintel Trend Locavore which highlights the seismic shift in why, where and how we consume food and the consumer desire for transparency from companies.
“They want to know who makes their products and how. They want to feel as though they are somehow helping their community by buying locally produced goods,” said Stanton.

Global markets to see 200 per cent growth in online food shopping

New research launched today by research organisation IGD in association with The Consumer Goods Forum anticipates transformation ahead for online food and grocery retailing. Across three critical markets it forecasts the following growth rates:

  • UK: online grocery sales to grow by 48 per cent by 2022 and account for 7.5 per cent of the total UK grocery market
  • China: online grocery sales to grow by 286 per cent by 2022 and account for 11.1 per cent of the total Chinese grocery market
  • US: online grocery sales to grow by 129per cent by 2022 and account for two per cent of the total US grocery market

Due to be highlighted at The Consumer Goods Forum’s annual Global Summit in Singapore in June, the latest insights argue there are three main reasons why no grocery retailer or supplier can afford to downplay online retail:

  • Across most of the world, online is already a fast-growing channel
  • Online and offline are merging, with an online store vital to complement physical stores
  • The digital world evolves faster than the physical one and online stores will become increasingly compelling

 

With over half (54 per cent) of food and grocery businesses only just starting to prepare for tomorrow’s digital transformation and 11% yet to begin, IGD has set out its vision of the online store of the future and what it will mean for retailers and manufacturers.

Based on a survey of 223 senior industry members across 42 different markets and a series of in-depth interviews, digital experts expect to see dramatic changes in the competitive landscape.

Seventy-eight per cent of respondents think shoppers will use online price comparison services more regularly to switch to the cheapest retailer, while 67 per cent believe shoppers will be able to choose from a wide range of specialist online retailers underpinned by a common and consistent delivery service. Additionally, 75 per cent expect more manufacturers to sell directly to consumers online.

Combining industry input with IGD’s global team of experts, the research concludes that the online store of the future will contain five key features:

  1. It will be a shopper’s personal micro store offering individualised and online-exclusive products, personalised promotions, recommendations, advertising and loyalty schemes. 69 per cent of respondents believe some retailers will apply personalised pricing and promotions in future. An additional 77 per cent think almost all digital communication to consumers by retailers will be personal.
  1. It will act as a smart personal assistant, connecting with various devices, preventing shoppers from running out of products and supporting their lifestyle goals. Nearly two thirds (60 per cent) of the experts surveyed predict that smart devices automatically re-ordering products will become a firmly established way of shopping for many people. The shopping experience will also be more inspirational, through personalised planners and sophisticated digital assistants like chatbots. 71 per cent of respondents expect some retailers to provide a service to offer personalised dietary guidance.
  1. It will be more efficient for shoppers, easier and quicker to order products. Login and payment will be available through facial, voice or touch recognition technology. Shoppers will incur less waste, with a greater choice of pack sizes and meal planners to help manage quantities and advise on using leftovers. A better fulfilment service will be on offer with more deliveries, on time and in full and products delivered at the right quality and freshness.
  1. It will help give shoppers a frictionless combined offline and online shopping experience. People will switch seamlessly from shopping online and instore with data cross-referenced between the two. This will help bring more personalisation to the physical store and help shoppers find their favourite products quickly and discover new ones. This is an opportunity that many companies need to work on with over half (53%) survey respondents saying they haven’t or have only just started to integrate their online and offline teams.
  1. It will at times be invisible, with shoppers buying products from shoppable digital content such as videos, photos and social media. In the future, people can be shopping at any time. There will be no limits to when you can be shopping. China has been leading the merging of media, entertainment and shopping, and Europe and North America will follow.

Grocery clearance store business NQR sold

Grocery clearance store business NQR has been sold as a going concern and will continue to operate.

Bruno Secatore and Luke Targett of turnaround, restructuring and insolvency advisory firm Cor Cordis were appointed as Administrators of the Australian-owned NQR Grocery Clearance Stores business on 24 January 2018.

NQR offers a simple and effective clearance solution for manufacturers, wholesalers and retailers, offering big brand products at cheap prices across Victoria. The business has continued to trade throughout the Administration period from its remaining 14 stores, after four stores were closed shortly after the appointment.

“Following a process of making improvements to prepare the business as an attractive asset for sale, we are very pleased to be able to announce that an agreement to sell the business as a going concern has been successfully negotiated,” Cor Cordis Partner Luke Targett said.

“We consider this to be a very positive result given the tough retail environment. We appreciate the unwavering support of the NQR staff, suppliers and loyal customers. We are pleased that the long established business will continue to provide a niche offering to the community and that so many jobs have been saved,” he said.

Based in Melbourne, the company currently has almost 200 staff, both in retail and administration.

The Purchaser will take day-to-day control of the business from 12 April 2018 by way of a License Agreement with completion of the sale expected to occur immediately prior to the second meeting of creditors around mid May 2018.

A spokesman for the entity that has purchased the NQR business – a private equity group run by like-minded deep discount professionals – said that they look forward to reviving the NQR business, a true Australian owned discount grocery business, with a key focus on delivering unparalleled savings to everyday customers.

“In the coming weeks there will be a formal announcement from the incoming CEO who will announce exciting news for all customers, suppliers & partners of the NQR business,” the spokesperson said.

The NQR business will continue to operate as normal and will be focused on offering great discounts on leading grocery items to all its customers.

Victoria to ban single-use plastic bags

The Victorian Government will ban single-use, lightweight plastic shopping bags, after it first consults with businesses and the community on how best to implement the policy.

Experience in other jurisdictions shows that banning lightweight plastics ban can lead to undesirable results, including increased use of heavier duty plastics, which can have an even greater environmental impact.

That is why the Labor Government will work with the community on how to best manage plastic pollution, and deliver a workable scheme that doesn’t unfairly impact on consumers, retailers, industry or the environment.

Plastics in the environment break up into smaller and smaller pieces over time, becoming increasingly difficult to manage. They can end up in our waterways, lakes and oceans — contributing to litter and posing a significant hazard to our marine life.

Reducing the number of plastic bags we use is an important part of addressing the overall impacts of plastic pollution in Victoria.

The 2015/16 Keep Australia Beautiful National Litter Index reported that Victoria has the lowest litter count in the country for the fifth year in a row.

The Victorian Budget 2017/18 builds on this success, providing $30.4 million over four years in new funding to improve the ways we manage waste and recover resources.

“Banning single-use plastic bags will slash waste, reduce litter and help protect marine life in Victoria’s pristine waters,” said Minister for Energy, Environment and Climate Change Lily D’Ambrosio.

“We will work closely with Victorian communities and businesses to design the ban, we’re proud that we’re doing our bit to reduce the impact plastic bags have on our environment.”

Global grocery: staying one step ahead of the shopper

Food and Grocery Australia 2017, to be held in Brisbane, will focus on the fast moving consumer goods and supermarket retail industry within Australia and globally.

As Australia undergoes structural economic change, the value and performance of the $126 billion Australian food and grocery sector will take greater prominence not only as a key mainstay of the manufacturing sector but also as a key driver of jobs, growth and investment. Similarly as the global economy pivots towards Asia, the emphasis of realising market potential into outcomes remains a core challenge for Australia’s food and grocery players.

This event will deliver a platform for CEO’s, Directors, and industry players from suppliers, manufacturers and retailers to forensically assess the key domestic and global drivers of the sector.

2017 will build on the success of the first Food and Grocery Australia to ddeliver a revitalised program providing greater value for your time and commitment, greater industry insights, greater breadth of opinion and greater business deliverables.

One of this year’s speakers is Joanne Denney-Finch, Chief Executive of IGD, a food and grocery research and training not-for-profit organization which has more than 1,000 members, spanning more than 40 countries.

Denney-Finch (pictured) will outline her vision of the future of the food and grocery industry.

The event takes place at Sofitel Brisbane Central from 23 -25 May. It gives suppliers, manufacturers and retailers an opportunity to connect with others in the industry.

 

Grocery sales cool over Christmas

The 2016 Christmas period will be remembered as one of the hottest festive seasons on record in Australia, but grocery sales remained cool.

The four-week period ending 31 December 2016 saw just 1 per cent growth in dollars spent compared to the same period in 2015 – well below the annual growth rate for total grocery.

“The way consumers shopped for groceries over the festive season remained similar to the total year trends with 40% of consumers purchasing product while on promotion,” explained Megan Treston, Director – Retailer Services at Nielsen.

“We also saw consumers slightly reduce the number of items in their basket during December compared to the previous year.”

Nielsen data revealed that six percent of Australian households sourced their Christmas groceries online, spending a total of $208 over the December month. Overall, online grocery sales in the month of December grew by 19 per cent compared with December 2015 and ahead of the 2016 year average of 16 per cent growth.

Grocery categories such as fresh berries, mangoes, avocados, mineral water, and fresh prawns surged during the period; reporting the biggest jump in both volume and value sales compared to the same period in 2015.

While melons, stone fruits, sliced meats and frozen poultry all declined in sales volume, and pantry staples including pasta and rice, long life juice and biscuits were also less likely to be found in shopper baskets compared to the previous year.

“Interestingly, there were no major shifts in price inflation or deflation driving this trend. However, senior families and small scale families were the two demographic groups that increased their spend above market rates,” Treston concluded.

Green and Gold-standard: Australian food products surge in popularity

Despite living in an age where foods are increasingly imported from overseas retailers alongside noticeable international brands, the latest findings from Roy Morgan Research show most consumers are still buying Australian-grown foods.

In the 12 months to September 2015, nearly 90 per cent of Australians aged 14+ said they’d be more likely to buy products made or grown in Australia –a noticeable increase over 85 per cent in 2013.

Although Australians’ renewed preference for ‘home-grown’ shopping is striking across the range of manufacturing industries, food ranked the highest amongst the population to be purchased if labelled ‘Made in Australia’.

In 2013, 84 per cent of the population were likely to buy food products made in Australia. By September 2015, that number had risen up to 88 per cent.

A two per cent increase also occurred in the wine sector, with 72 per cent of the popopulation willing to buy wines grown or made in Australia in 2015.

According to Roy Morgan Research CEO Michele Levine, “The love affair between Australians and Aussie-made products shows no sign of fading. In fact, it’s the healthiest it’s been for two years, with nine in every 10 Australians saying they’re more likely to buy products in Australia.”

In speaking with Food Magazine, a spokesman for Australian Made said consumers have the reassurance that food grown locally will meet high Australian standards.

By buying locally-grown goods, money is then given to support local jobs that can produce great products and produce throughout 2016.

ACCC slams Woolies for ‘unconscionable conduct’ towards suppliers

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 opens in Martin Place

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.”

Costco driving change in Australia’s FMCG sector

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.

Price competition

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.

Fuel retailing

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.

Supermarkets still squeezing suppliers in agreements, says ACCC chairman

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."

All out of fresh ideas: how supermarket giants send mixed messages about food

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.

Private labels

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.

 

Both Coles and Woolworths have employed celebrity chefs, such as Jamie Oliver, with a reputation for caring about fresh and local food. Scandic Hotels/Flickr, CC BY-NC

 

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.

Public concern

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.

The Conversation

Adele Wessell, Associate professor

This article was originally published on The Conversation. Read the original article.