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Woolworths and Coles Dominate Red Meat Market Control, Centralize Operations, and Face Criticism for Alleged Price Gouging
Editor: Andrew Dunlop, Australian Beef Association (ABA).
Key Points:
- Woolworths and Coles have established dominance in the red meat market as smaller retailers and local butcher shops face closure or specialization.
- Large retailers align with processors in preferential or exclusive arrangements to secure priority and supply chain security.
- In the early 2000s, retail chains like Woolworths formed strategic partnerships with processors such as Frews for lamb and Teys for beef.
- Retailers owned the livestock, closely managing efficiency and costs in the processing chain.
- Over the years, there has been a shift from in-store butcheries to centralized facilities, reducing costs and skilled labor requirements.
- Retailers, like Woolworths, have restructured their red meat business, emphasizing centralization of packaging in retail-ready formats.
- Despite changes, large retailers seem to have strengthened their control over the supply chain, as seen in Woolworths' establishment of Greenstock.
- A study by the University of Tasmania and the Australian Beef Association in 2013 estimated the producer's share of retail beef spend, revealing a decline over the years.
- Price surveys in 2023 indicate minimal differences between Woolworths and Coles prices, while independent retailers offer lower prices.
- A comparison of retail beef prices and farm gate prices reveals a widening retail-to-producer price spread, indicating potential market concentration issues.
- Critics, including Choice Magazine and senior business journalist Jonathen Barrett, accuse Coles and Woolworths of expanding profit margins during a cost-of-living crisis.
- Lack of competition, alleged price gouging, and failure to pass on reduced costs to consumers raise concerns about the supermarkets' corporate social responsibility.
- Inflationary pressures have desensitized consumers to high prices, affecting the consumer price index and influencing interest rate policy.
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Link to the full article: https://www.onfarm.co/blog/onfarm-support/woolworths-and-coles-dominate-red-meat-market-control-centralize-operations-and-face-criticism-for-alleged-price-gouging-8eeb8