Monday, November 28, 2011

The demonic duopoly?

The assault continues on the demonic duopoly of retailers Woolworths and Coles. The proliferation of their own brands, such as discounted milk, seems to be causing much angst and handwringing amongst diverse section of the populace!

Stephen King from Monash (ex- ACCC) had a good post on this over the weekend at Core Economics.
The manufacturers who have most to fear from home brands are those whose products do not survive on quality but on marketing hype. Those manufacturers risk becoming contract suppliers of home brand products. Home brands will reduce the profits of those manufacturers–but consumers will benefit.
Federal Industry Minister Kim-il-Carr has an opinion posted today and seems to have a fixed mind regardless of any ACCC outcome, or any evidence based research. Again the left / right convergence on populist economics is apparent as Carr basically aligns with Katter. George Megalogenis posted on the decline of economic literacy since the keating era in The Oz at the weekend.

Separate from any opinion on the market power of the demonic duopoly my own opinion is that our food manufacturers are just not very good at branding and marketing. The demonic duopoly have been far more innovative and responsive to societal changes than the food manufacturers who are their suppliers.

Witness the Macro Wholefoods brand at Woolies. This is not a downmarket cheap offering as in the past with home brands but a high quality range branded on the basis of consistent quality above competitors. Their rolled oats makes Uncle Toby's almost chook food in comparison. The polenta is exceptional with local Misty Mountains full cream jersey milk.

Woolworths currently have home brand smoked oysters on specialat $1.40 and the quality is more than acceptable. Reject John West!

 

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