Why is Countdown's parent company giving Aussies a price cut while we get a freeze?

Wednesday, 18 May 2022

Commerce Commission chairwoman Anna Rawlings and commissioner John Small insist proposed supermarket industry reforms will make a difference, even though they are making no promises they will lead to a third entrant.

Countdown’s Australian counterpart Woolworths has reduced the price of 300 essentials, including vegetables and meat, by up to 30% this winter.

But its New Zealand business, Countdown, froze the price of 600 essentials, and didn’t include fresh or frozen vegetables,. The only meat in the promotion was salmon and a pack of streaky bacon.

Despite the two supermarkets being owned by Woolworths Group, the different promotions were a sign of the markets each was operating in, senior marketing lecturer at the University of Auckland Dr Rick G. Starr Jr said.

From May 4, five days before Countdown froze the price of its list of essential items, Woolworths dropped the prices of winter staples until August 23.

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The Woolworths winter price drop features frozen fruit and chicken.

Woolworths shoppers could save on a range of everyday items, including a pork leg roast, pork shoulder roast, soup, chicken breast, cheese slices, and Strepsils.

Starr said Woolworths had more competitors such as Aldi in Australia, which made for a more competitive market.

A Countdown spokesperson says it can not comment on the Woolworths promotion.

When Aldi arrived in Australia in 2011, Woolworths and Coles were the only supermarkets and dominated the market. It forced a price war, with both supermarkets dropping prices and running promotions, he said.

Woolworths needed to offer more competitive pricing to compete effectively in Australia, and its grocery market was large enough to easily support price reductions. But Countdown was battling with just one competitor, Foodstuffs, and neither chain had much incentive to seriously reduce overall prices. he said.

Vegetables are also prominent on the list, compared to Countdown’s.

“While I see these price reductions only as small effort aimed at gaining goodwill, Countdown and Woolworths do compete in different countries with different supply chains.”

Frozen and fresh vegetables were also prominent on Australia’s list, as well as nappies, soap and dried pasta – which Countdown did not include in its price freeze of more than 600 items.

Of the 629 items, 19 are alcoholic drinks, 37 snacks and sweets, 22 biscuits and more than 30 desserts.

A Countdown spokesperson said it could not comment on the Woolworths promotion.

She said fruit, vegetables, meat and dairy were susceptible to seasonal conditions and export prices and, as a result, prices changed frequently.

“Cheese has had two increases since February, for example. We’ve been able to include some carrots, pumpkin and onions, and if we can add more fruit and veges over the next few months, we will.”

A Woolworths Group spokesperson said there were differences between New Zealand and Australia, and could not offer the same promotions.

“We do operate as one group, it's important to remember that Woolworths and Countdown are two separate businesses, in two different markets with different supply chains, so price and promotion activity will reflect this,” the spokesperson said.