Vegemite price knifed as bargains spread

John Rolfe
May 08, 2013
News Limited Network

COLES has expanded its “Down Down” campaign to leading branded groceries by slashing the price of Vegemite, corn flakes and Milo.

Coles has cut the cost of a 725g box of Kellogg’s Corn Flakes by $1.25 or 24 per cent to $4, a 1.25kg tin of Nestle Milo by $1.85 to $12 and 600g jars of Kraft Vegemite by 99c to $7.

Two sizes of Old El Paso taco kits were cut by as much as 12 per cent.

Another 36 key products were also reduced in price.

That brings the number of shelf items being discounted as part of the Down Down campaign to more than 1400. While many of those are not category leaders – or common buys – the cuts headlining the latest round of reductions to pantry staples should deliver real savings to shoppers.

Nine in 10 people say a family should have Vegemite in the cupboard, while Milo is the second-ranked brand among customers.

The price cuts will be in place for a minimum six months. Such products are usually on sale one in every eight weeks. Coles said its research showed three in four shoppers purchase popular brands when they are discounted. Milo, corn flakes, Vegemite and the Old El Paso kits haven’t been this cheap for at least two years.

For Coles and the manufacturers of the discounted groceries, the pay-off is a substantial increase in sales volumes. Coles merchandise director John Durkan said he expected sales jumps of at least 10 per cent.

“I think the customers are going to love it,” Mr Durkan said.

Last month, Coles said supermarket prices were down 1.7 per cent on average this financial year.

Supermarket food prices have been falling for about four years, after nearly a decade of rising more quickly than in any other major developed nation.

Coles said that the price cuts were co-funded with manufacturers. Previous rounds of the Down Down campaign have been underwritten almost exclusively by Coles.

A Nestle spokeswoman said it was “supporting our major retailer partners to bring value to Australian shoppers”. Kraft did not comment.

It is unlikely that Woolworths will allow its major competitor a win, meaning shoppers at both the major chains are likely to enjoy deeper discounts on key branded shelf items in coming months.

In a move likely to meet a mixed response, Coles last night rolled out a new TV commercial again featuring Status Quo, this time singing reworking their 1979 hit “Whatever You Want”.

On Youtube, the three-minute version of Status Quo’s “Down Down” has received more “dislikes” than “likes” since its launch last year.

Other price cuts introduced yesterday included 49c or 17 per cent off Adidas roll-on deodorant, now $3.50, and a $2 cut to Fantastic Noodles six-packs, a price reduction of 23 per cent.