Supermarket Wars

Written by Ian Robertson on 10th May 2011

So, over the past few weeks the newspapers have picked up on a little tiff between Coles and Woolies, and their suppliers. Whether it be chicken, noodles, wine (or indeed VB) it is hard to see where this will end up - and if the result will be good or bad for wine.

It started with murmours from Fosters about the selling of VB at below wholesale prices. Yes, of all places for a company like Fosters to make a stand, they did it over VB. And the reason? To protect the prestige of the brand which would be affected by such severe discounting. Fosters - gimme a break. A few days later, some Fosters employees waltzed into a First Choice store and took case of Penfolds 389 that was being sold under RRP - whatever that is in the wine world. Ok Fosters, the brand protection thing makes more sense in this case.

However, despite minor grumblings since then, nothing has really happened. Some little news stories keep emerging, mainly now about Coles and Woolies competing on price in other spaces, but wine has kept a little silent. And given my recent trips to First Choice and Dan Murphy, much wine is still being sold at a very low price.

The obvious question is where does this end? The strange answer is - probably as it is right now with status quo. No supplier can afford to peeve the supermarket chains for too long - even a supplier like Fosters is replaceable to the chains eventually. These organisations need cashflow to survive, and so they will eventually heel to the buyers of their product.

And the supermarkets? Every so often they will need marketshare and revenue to make shareholders happy, and if that means a price war with their only real competition, then so be it.

How on earth will this change? You tell me?