Nicky Phillips
January 31, 2012
The Age
FRUIT and veg is set to become the new battleground of the supermarket price war after Coles announced it will reduce the cost of selected products by up to 50 per cent from today.
If Woolworths follows suit, fresh produce will become the latest product to be heavily discounted by the supermarket giants, following price cuts to milk, bread, toilet paper and washing powder by both companies in the past year.
The peak body representing vegetable growers, AusVeg, said the announcement was ”concerning” because, while an oversupply of produce this season meant some growers would benefit in the short term, it was unclear what impact the price reduction would have on the industry over time.
The general manager for fresh produce at Coles, Greg Davis, said the company had worked closely with growers to transform their fresh fruit and vegetable prices, investing in new growing techniques, quality control, store displays and now lower prices for customers.
A spokesman for the company, Jon Church, said it had invested millions in the campaign but had worked with suppliers on an agreed price.
”By giving growers a commitment that we will take as much of their crops as we possibly can we have provided them certainty that they have a market for their product,” he said.
But a spokesman from AusVeg, William Churchill, said the push by the major retailers to capture market share would put pressure on other growers who did not supply Coles, as competitors tried to replicate the offer to their customers.
”We can see that the supermarket wars have well and truly arrived in the fresh produce industry and this fight will get savage,” Mr Churchill said.
A spokeswoman for Woolworths, Claire Kimball, would not comment on whether Woolworths would follow its competitor and drop its prices, but said fruit and vegetables had been depreciating for the past 12 months due to the volume of product on the market. She said the lower prices would continue for some time.
Woolworths will announce its second-quarter sales today, and analysts from Goldman Sachs expect the company will report lower growth in food and liquor sales compared with Coles, which will make its announcement on Thursday.
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