Coles vegetable cuts criticised, queried

Coles has launched a new campaign it says will halve the price of some fruit and vegetables, but the move has quickly drawn criticism from business groups who worry about its impact on smaller retailers and producers.

Dubbed ‘freshness’, the new campaign will see the retail giant double the number of weekly ‘super specials’ it offers for fresh produce.

In a press release announcing the new campaign Coles says it should be good for business.

“By offering customers low prices on fruit and vegetables Coles expects to increase sales, providing a more certain market for Australian growers who with such an abundance of product may otherwise end up having to leave some crops in the fields.”

But Coles’ reference to an “abundance of product” was quickly noted by AUSVEG, the national peak industry body representing the interests of Australian vegetable and potato growers, which has pointed out that a good crop means produce prices are already falling.

Woolworths has seized on those remarks by pointing out that Coles’ discounts may therefore not be unique or particularly deep.

Others have criticised the competitive landscape the promotion will create.

“The question really is who will end up paying for these discounts in this latest price war?” asked Riverina Citrus Chairman, Frank Battistel.

“Today’s announcement will be a huge concern for many, many small fruit and vegetable stores across the country that simply cannot compete with the devastating power of Australia’s two massive supermarket chains,” he said.

“Citrus growers are already having to sell our produce at record low prices there is no way we can reduce them further. Some of our growers are already selling at a loss – it’s a very hard time for our growers especially with the lack of export opportunities due to the high Australian dollar.”

The Australian Retailers Association’s Russell Zimmerman also told My Business he has concerns that Coles’ promotion must be fair.

“We do not want to see suppliers are being pushed down to a point whereby it becomes uneconomical and we don’t want smaller retailers unable to sustain their businesses,” he told My Business.

“Nor do we want a predatory pricing situation where other retailers cannot compete. I feel the ACCC would want to look at it very closely if that were the case.”

“Hopefully lots of retailers will be able to enjoy lower produce prices.”

“Competition is good because the consumer wins,” he added. “But competition has to be on a level playing field and has to be fair.”