From coronavirus to drought – why we are seeing some strange supermarket prices

Press/Media: Expert Comment


If cauliflower, celery and wombok cabbage are on your shopping list, you’ll likely be a bit shocked by the bill.

But the unusually high prices of some fresh fruits and vegetables are not a result of panic-buying, or price gouging by supermarkets.

Rather, they’re due to drought and poor growing conditions that have hit farmers in parts of the country.

There have been “some fluctuations” in the price of fresh foods, Woolworths chief executive Brad Banducci explained in a note to customers on Thursday.

“Some of these are normal seasonal variations and some, like cauliflower and broccoli, are still seeing the longer-term impacts of drought and unseasonal growing conditions,” Mr Banducci said.

Consumer expert and Macquarie Business School chair of ethics Jana Bowden said such price hikes are “not due to price gouging by supermarkets”.

They are “genuinely due to the drought and poor weather conditions”, with prices increasing “at the wholesale level, not just the retail level”, she said.

Supply issues for vegetables, including cauliflower, started well before the coronavirus pandemic, with the nation’s peak body for vegetable growers warning of price rises of 20 to 50 per cent as the bushfire crisis escalated in January.

However, some price hikes have been exacerbated by a coronavirus-induced spike in demand for produce as households stay at home and stock their fridges and pantries, Dr Bowden said.

It’s not all bad news for shoppers, though, with prices down on items such as truss tomatoes thanks to recent good weather, and stable across staples such as potatoes, carrots and onions.

Mince meat proves a problem for Coles and Woolworths

Both Coles and Woolworths have lifted in-store restrictions on mince meat and prices have fallen.

Last week, QUT retail and marketing professor Gary Mortimer snapped a photo of shelves full of mince beef trays going for bargain-basement prices at a Coles supermarket.

A 500g tray of regular mince, normally $6, was on sale for just $2.

The discount mince meat signals a major problem for Coles and Woolworths, Dr Bowden said.

Unable to buy what they needed at the big supermarket during the panic-buying peak, many consumers “looked for alternative options” and “have been shopping at smaller stores” and butchers, she said.

“What we’re starting to see is that Coles and Woolworths need to try to claw back sales in the meat category, particular from local butchers.”

This may prove difficult, as “when you visit local stores, whether it be
a cafe or a butcher, you tend to also develop a close kind of relationship with that provider”, Dr Bowden said.

It’s not the anonymous shopping experience that consumers have when they go to the supermarket.

“So this could be a really good thing for mobile local stores.”

Is toilet paper demand tapering?

Toilet paper panic-buying has swept the world, and shops are still struggling to meet consumer demand.

At Woolworths, “demand for toilet paper finally appears to be tapering, with this week’s sales expected to be around 15 to 16 million rolls,” Mr Banducci said.

“That’s still 45 per cent up on last year, but with supply up 70 per cent on last year, there is increasingly more on shelf.”

Toilet paper shortages are no longer simply due to panic-buying, Dr Bowden said.

Instead, Australia is now experiencing “a sustained increase in demand beyond normal levels” due to lockdown measures, Dr Bowden explained.

“People are staying at home during this lockdown period and consuming more of the product.”

Period14 Apr 2020

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