Grocery shopping is a bugger even at the best of times (which is when the children aren’t with you, the trolley doesn’t wobble, you’ve remembered your list and your eco bags and raspberries are on special). But when you add a minor crisis of conscience at almost every step of the way, it becomes a TOTAL PAIN. We are faced with increasing numbers of ‘own brand’ (private supermarket branded) products, which we are oft told are hurting our farmers and our economy. Should I just gleefully grab the bargains or should I think more about provenance and integrity and long term gain?
It’s bloody tempting to reach past ‘premium’ branded sugar when supermarket private brands are about half the price. And sometimes it’s just impossible to find anything other than private brands (even if not ‘own’ branded, it’s often disguised – a la Macro health foods or Great Ocean Road cheeses, owned by Woolies and Coles respectively). Last week I left without cherry tomatoes because they were all Woolworth’s brand. But surely buying own brand is still supporting a tomato farmer somewhere?
Being married to a dairy farmer, I am most often asked about fresh milk. Specifically, (and very kindly) “which kind of milk can I buy that supports your business?” This question is asked more frequently since Coles dropped their pants and their milk prices to $1 per litre about 2 years ago, and Woolies followed suit. I always parrot off the same answer without knowing all the facts behind it, so I’ve done some homework and in doing so opened up a whole lot of new questions. This is a worm canny issue. Let’s milk it…
Is there a difference between own brand and home brand?
Well the major supermarket chains have their ‘own’ or ‘private’ brands, which are made up of three tiers – top end (Woolworth’s Select and Coles Finest), mid range (Woolworths or Coles brand) and the value tier (Coles Smartbuy or Woolie’s Home Brand). The top and mid tiered products are often dressed up to look eerily like the premium brands. There are also organic lines (such as Woolie’s Macro and Cole’s Organic).
Where are private brand products processed/produced?
There are no ginormous, Suess-esque Woollies or Coles factories chugging away day and night to produce every private brand product. It’s different for each product but some are made in the very same factories that make the premium brands, others are imported from overseas because it’s cheaper or there’s some kind of trade balance obligation with the particular country (don’t ask me about that, it’s another kettle of fish and I’m trying to focus on one issue at a time*).
Commonly the private brands – and the premium brands for that matter – are made up of ‘local and imported produce’ – you’ll see it on the label. There is usually no mention of percentages, which would indicate that the majority of the ingredients are cheaper imports.
Is there a quality difference between premium brands and private brands?
From what I can glean from the information at hand, the quality of many of the private brand products is negotiated between the retailer and the supplier (processor/producer) according to prices and recipes, quality etc. This means that in most cases, private branding does not equate with poorer quality.
When you get down to the value tier (Home Brand and Smart Buys), your chances of getting as good a product as the premium brands lessen (the jelly is shite, don’t go there).
Generally speaking, it’s reasonable to expect that you get what you pay for – i.e. the processor will likely downgrade the quality if they are being paid less for it. If the cost cut is absorbed by lower packaging costs, smaller net weights or other factors, then maybe the quality doesn’t suffer.
I sampled Coles Australian tinned diced tomatoes against Ardmona Australian tinned diced tomatoes (SPC owned, Coca-cola owned) and found that the recipe is slightly different in that Coles use tomato puree added to 60% tomatoes while Ardmona add juice. There is not much difference in taste but I would say Coles trumps Ardmona. Coles brand is 6c cheaper.
In other cases, such as with our milk (white or fresh milk), product standards are governed by Food Standards Australia New Zealand (FSANZ) Food Standards Code. All full cream fresh milk, for instance, must contain at least 3.2% fat and 3.0% protein. The reduced fat varieties also have standards. This means that whether you buy home brand or Pura brand, you are getting the same product. In fact, in Tasmania, our milk gets picked up from our farm and transported to a factory that processes the lot and puts it into all private or Pura branded containers.
So great, in the case of milk, I’m getting the same product for a fraction of the price
Yes, but wait, there’s a catch (yes I am biased, but trust me, $1 per litre is actually too good to be true).
We as the farmers get paid considerably less for the percentage of milk that goes into private branded containers, but it costs us the same to get it out of the cows. We don’t have a Home Brand herd eating less nutritious grass, nor do we add water to the vat to make it go further – we can’t do that because of the FSANZ code. Nor can our processor (National Foods)add or subtract ingredients or take a step out of the processing procedure like other unregulated products (such as pasta or tinned fruit). For the first half of this year in fact, we were paid a price per litre that was under the cost of production and utterly unsustainable.
An unsustainable price to primary producers leads to farmers getting out of the industry altogether and a reduction in the amount of milk produced. And herewith comes the old shortage/surplus formula. If there is a shortage of milk (and there will be if we are forced too often to operate at a loss), hey presto – up, up, prices are up.
But didn’t the supermarkets say they’d absorb the costs of cutting milk prices?
Yes off course they did, they had to be seen to be doing the right thing by the little people. When Coles first cut the price of milk to $1 per litre, they gave the processor a negligible price rise which was never passed on to the farmers, essentially because it was negated by the fact that sale of more dollar litres caused a dramatic reduction in branded milk sales.
A Government inquiry into the effects of the price cut supported Cole’s claims that the dairy industry was not being negatively impacted by the price cuts, but these findings have been disputed ever since and there has been talk of the inquiry reopening. The Queensland Dairy Farmers Organisation estimates $220 million has been lost in 2 years since the price cuts were introduced.
Both supermarket giants have since (indirectly) admitted that the milk price cuts have impacted farmers. In March this year, Woolworths stated that the price drop, along with a high Aussie dollar and a tough export market is contributing to the struggle faced by farmers. This statement co-incided with the announcement that in parts of NSW, Woolworths would cut out the middle man and begin to source milk directly from the farm gate. Both giants are actively using farmers in marketing campaigns to convince the public that they are farmer-friendly. An admission of guilt if ever I’ve seen one.
Former executicve chairman of Woolworths, Paul Simons, noted recently that the milk price cuts have been the worst example of screwing the producer he has seen, that there is always a certain level of guilt involved in such cutthroat business dealings, but that the duopoly has no choice but to stay competitive.
Are the supermarkets making more money from milk since they dropped the price?
Not from milk sales, no. Last year, Coles sold 11% more milk but the value of sales was down by 2%. Woolies overall sales increased by 3.7% but sales decreased by 3%.
So why do they cut the price? Because milk is perishable and needs to be bought more regularly than the average family does the grocery shop. Previously most people popped into their local milk bar or service station for milk but now they go to the trouble of going into Coles or Woolies (and walking all the way down the back, past shelves and shelves of ‘bargains’ and temptations) to get their cheap milk. Cunning buggers these supermarkets aren’t they.
It’s no wonder we see so many empty corner shops these days. In Tasmania they are almost a thing of the past and if they do still exist, they have a sort of sad nostalgia about them.
Are people price motivated though, or would they rather support local industry?
Consumers, in general, are price conscious. We don’t want to believe it but the figures tell a story: over 72% of the total milk sold at Coles in 2011 was the $1 per litre own branded milk.
And the story is pretty much the same across all products – the public wants value for money. In fact in many cases, if suppliers chose to opt out of the private brand game, they would be losing around 70% of their business. Optimum shelf position as well as lower prices and copy-cat packaging has just made private brands a leader in so many product ranges.
But surely consumers can’t be blamed for being budget conscious?
No of course not. The cost of living is going up all the time, milk and fruit and vegetables are staples and I’m not about to sneer at anyone who wants to feed their children and keep the household budget down. But I would like to make sure they know that by all accounts (including our bank account), prices as outrageously low as $1 per litre price is unsustainable and the longer we support it the more farmers will be driven out of business and the more likely it is that local fresh produce will become a luxury product with a luxury price tag.
Is it better to buy an Australian private brand product or a premium brand import?
Australian all the way baby, preferably local. There are still local primary producers in work if demand is there. In many cases if the product isn’t taken to fill up home brand packaging, it isn’t taken at all. If consumer demand for imported products increases and local products stay on the shelf, Woolies and Coles will stop buying them. Factories or producers will be forced into bankruptcy, trees will have to be pulled out and farmers will walk off the land.
As it is, supermarkets and processors who have paid for their contracted local produce and then bought extra overseas produce will not hesitate to leave surplus local yields to rot in the ground or sour in the vat so as not to be overstocked. Understandable if the overseas bills are already paid – and a good season cannot be predicted – but the very fact that fresh local food is rotting while the same product is being imported tells me that the system is fucked. (I’ve been trying not to swear but I can’t think of a better word).
Frozen and tinned food industries are staring down the barrel of bum drop out already. They just can’t match the low prices of their overseas competitors. Right that’s it, it’s bloody cold in those freezery parts of the supermarket but I’m going to dig around until I find those Aussie frozen foods. Or not buy them at all.
Most of the tinned tomatoes (2 in 10 cans) we buy these days are Italian imports – they are cheaper for the supermarkets and cheaper for consumers, as well as making us all feel that our cooking is just that little bit more authentic (Italian tomatoes have a romance about them but there are allegations that workers in Italy are exploited for cheap labour).
You are very biased against the supermarkets, there must be a good reason to import products we can grow or manufacture here?
Well they are in business too and of course they will prioritise their bottom line over their consumers. They are facing increasing competition from overseas companies like Aldi and Costco who are a major discount players in the Australian grocery scene right now. These companies have limited ranges of unbelievably cheap own branded products which are creating a buzz. I understand that the supermarket duopoly must remain competitive. But for the 2012 financial year, Woolies made a $1.8 billion, while Coles profited just over $2 billion.
When I watch my husband working like a mule day after day for a dwindling profit (some years no profit at all), I find it hard to be sympathetic.
The sad fact of the matter is that if primary industry doesn’t play with the big boys, they don’t get to play at all. The supermarkets have the primary producers and the processors by the balls and they are squeezing just a little bit harder each year. This means that businesses must cut costs, play smarter, get bigger or get out. Many have already had to bail out, how many more years of this can the rest take? Howe long before we no longer have a choice but to buy private brands over whose ingredients and quality are determined by cost?
Here are my new shopping rules:
- Buy local (in my case, Tasmanian). If this means shopping at fruit markets, farmer’s markets, on farm then so be it.
- Buy Australian if there’s no Tassie/ local option. If there’s no Australian asparagus, don’t buy it. Asparagus makes your wee smell funny anyway.
- Buy premium if there is an Australian made/produced option.
- If really desperate, buy private brands if they are Australian produced over imported premium products.
- Don’t buy Italian olive oil and tinned tomatoes just because they look nice in the pantry and you might one day get all try hard magaziney and plant some herbs in the used tins.
- Don’t EVER be fooled into thinking the supermarkets are cutting prices for you – it’s never about the customer and always about margins.
The world’s population is over 7 billion and growing fast. And we all need to eat. I don’t think that food production is something we should be playing silly buggers with. Australian primary producers are precious and we need to look after them.
I would really like to see a campaign that counters the “down, down” catchcry with something that reflects consumers’ growing desire for provenance. Here’s my suggestion: “Great, great, farmers are great, shove the price cuts right up Cole’s date”. Or something.
Tags: coles, farmers, farmers under stress, farming, food, fresh food, fresh milk, fruit rotting on trees, home brand, imported produce, italian tomatoes, overpopulation, own brands, primary producers, private brands, pura milk, supermarket brands, supermarket duopoly, supermarkets, tinned tomatoes, white milk, woolies, woolworths