Competition causes Supermarket Chain, Coles, to suffocate dairy industry
Australian supermarket chain,
lower prices for Coles branded milk
Coles, has been under scrutiny lately due to price cuts made earlier this year for their own brand milk . The decision to cut the price of its own label milk was due to the strong competition between rival supermarket company, Woolworths. As the two supermarket chains fight it out for a bigger share of consumers, others in the form of suppliers and retailers are feeling the effects dawn upon them.
While Coles and Woolworths maintain their strategy of marketing their milk brands at a reduced cost, farmers are under severe financial pressure. Roughly 36 million dollars has been lost in the dairy farmers industry since the decrease of Coles brand milk to a dollar per litre in January 2011. Though Coles takes the hit for its milk brand price cuts, it gains from consumers purchasing other goods in their supermarket therefore the real damage done is towards the branded milk sold in their supermarkets. One such instance is evident with Parmalat, whom have taken a $767,000 hit in sales. As sales drops for branded milk, so does the income for dairy farmers thus the possibility of leaving the industry becomes realistic.
