Supermarkets in Australia

Issues > Supermarkets in Australia

Australia has one of the most concentrated grocery markets in the world. Woolworths and Wesfarmers (owner of Coles) account for almost 80% of supermarket sales, 60% of alcohol retail, 50% of petrol retail and 40% of all retail in Australia. The more market share they have, the more influence they have over suppliers, and the easier it is to stamp out smaller independent retailers.

Woolworths is Australia's largest owner of poker machines (13,480 machines) and the largest seller of tobacco and alcohol.  [profile]

Wesfarmers operates in the areas of retail, coal mining, energy, insurance, chemicals and fertilisers, and industrial and safety products. It bought Coles Group in 2007 for $22 billion.  [profile]

Metcash, who supply IGA Supermarkets, accounts for 16% of supermarket sales. Metcash distributes primarily to independently owned stores. They supply IGA, Foodland, Foodworks, 7-Eleven, Lucky 7, BP and several liquor retailers.  [profile]

Aldi have 215+ stores in Australia, all east coast. Most brands in store are ALDI owned. Over 80% of products are Australian made. Criticisms for German parent company include use of sweatshop labour, worker exploitation, and palm oil supply chain.  [profile]

Woolworths and Metcash are both set to move into hardware retail, to compete with Wesfarmers’ Bunnings. Metcash bought 50.1% of Mitre 10, while Woolworths bought Danks and is planning to open 150 big-box hardware warehouses over the next five years.

The supermarket giants have been blamed for Australians paying the fastest growing prices for groceries in the developed world.

Supermarket owned brands (known as ‘private label’ or generic ‘house brands’) command a 25% market share, expected to rise to 30% in the near future. 1

‘House brands’ mean big profits for supermarkets and are geared towards customer loyalty by creating products that can only be purchased in their store. Most major supermarkets are trying to shake the poor quality image of generic brands by rolling out their own tiered labelling structure, each tier cleverly marketed to appeal to a different customer base.

As major supermarket chains give more shelf space to their own brand items, name brand products are squeezed off the shelves – with only the top selling items remaining. For customers, this means less variety, less choice, and the disappearance of familiar brands from the aisles. For supermarkets, it creates a shift in bargaining power further down the supply chain; Australian farmers and wholesalers have little choice but to sell through the supermarkets’ own brands and are forced to compete with cheaper, often heavily subsidised, foreign imports. 2

We don't have much information on who manufactures specific house brand products, however the following directory is a list of companies and services that fulfil private label requirements. It gives some indication of who the major suppliers are.  Private Label Manufacturers Association directory

* distribution only. The stores are independently owned. The retail brands are owned by Metcash.

See Four Corners 'The Price We Pay' report that investigates how the market dominance of Coles and Woolworths affects consumers, suppliers and the nation's food bowl. (August 1, 2008)  The Price We Pay

See ABC's Hungry Beast program on the dominance of the big two. (March 10, 2010)  The Beast File: Woolies & Coles