Coles and Woolworths have slashed prices of their private label groceries to counter the growing threat from Aldi and raised prices of national brand groceries to offset private label discounts, according to a Deutsche Bank supermarket inflation survey last week.

While the survey suggests that Coca-Cola Amatil (CCA) slashed its Coca-Cola prices in the June quarter and early July, price discounting occurred across the market from small cans to bulk packs that included convenience stores.

Deutsche Bank said that Coles did not appear to match Woolworths discounting and increased the cost of its more expensive national brands.

Deutsche Bank’s latest supermarket inflation survey shows private label grocery prices dropped 6.1 per cent in the June quarter. It was the sharpest fall in more than 18 months, as Woolworths and Coles sought to narrow a 30 per cent price gap with Aldi, according to media reports.

The survey found that prices for a basket of national brand groceries at Coles rose by 5.1 per cent, while Woolworths cut its prices by 2.6 per cent. Overall prices for branded groceries rose by 1.3 per cent in the June quarter compared with 2.8 per cent in the prior quarter.

And the survey found that Coca-Cola cut its prices in the June quarter following the introduction of Coke Life, with Coca-Cola prices falling by 11% compared with the same period last year.

CCA reaffirmed its earlier position in relation to Coke Life, that the launch has gone well and that it’s sticking with its original forecast of a 1-2% market share.

The overall price of soft drinks was down by 7% in the June quarter, compared with the same time in 2014, while prices for Schweppes products fell by 2.5%, according to the survey.

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