Coles Express petrol an average 4c more expensive in Melbourne, Brisbane, Sydney

John Dagge,
March 15, 2017
Herald Sun 

COLES is funding its price war with a resurgent Woolworths by jacking up petrol prices, a new analysis indicates.

A detailed review by fuel tracker service MotorMouth shows unleaded petrol is on average more than 4c pricier at Coles Express than at rival petrol stations across Melbourne, Sydney and Brisbane.

The supermarket giant’s petrol is more than 3c dearer on average across all state and territory capitals.

The analysis also shows the gap is widening between petrol prices at Coles Express and prices at rival petrol stations.

Coles, which has 695 petrol stations, has given up profit in its key grocery business as it fends off a resurgent Woolworths and onslaughts from German goliath Aldi and US grocer Costco during this time.

The new data from MotorMouth builds on a report from Deutsche Bank that concluded there was strong evidence Coles was subsidising its groceries via the fuel pump.

It marks a turnaround from three years ago when Coles and Woolworths were being attacked by the competition regulator for using grocery profits to slash petrol prices.

The latest numbers show that in Melbourne, the price for Coles Express 91 octane — standard unleaded petrol — has been 2.3c a litre higher than the market average across the city over the past nine months. Last month, the gap was bigger still at 3.4c.

Across Melbourne, Sydney and Brisbane, Coles Express petrol was 2.8c a litre more than the market average over the nine-month period.

The gap hit 4.2c a litre last month, effectively making Coles’ 4c-a-litre fuel discount dockets redundant.

Coles does not provide fuel prices to MotorMouth but the fuel tracker service collects them using a team of drivers.

Coles Express petrol stations vs. the market.

MotorMouth managing director Alan Cadd said it was clear the price of Coles Express fuel was trending significantly above the market average. 

Petrol from Woolworths, in contrast, was generally below the city average over the review period, he said. “We can only surmise that this is directly related to two quite different pricing strategies,” Mr Cadd told Business Daily.

A Deutsche report released in late April last year showed Coles Express was 2c to 3c per litre dearer than the wider market in key capital cities.

The report noted Coles was losing fuel volumes — but earning more profit on each litre sold — as motorists went to rivals. It concluded the higher pump price “should provide Coles with the firepower it needs to continue to invest heavily in prices”.

Coles fuel sales dived 13.3 per cent during the six months to December compared with the same period a year earlier.

“The petrol volumes are down sharply so obviously it is not going unnoticed,” said an analyst who declined to be named. 

In a statement, Coles said it always sought “to provide a competitive fuel offering”. Customers could save up to 14c a litre by spending set amounts at Coles supermarkets and in Coles Express convenience stores, the retailer said.