It is often argued that the extent of power in the hands of the Woolworths/Coles duopoly is reaching a dangerous level. Their absolute control of the grocery market - and virtual takeover of the petrol and hardware industries - leaves the element of control at the whim of new "Masters of the Universe ".
A few years back parliamentary concern resulted in the passage of laws to try and regain a degree of protection for those trying to earn a living in competition with the duopoly. It was claimed that independent greengrocers and butchers were excluded from shopping precincts when the duopoly negotiated a lease as the head tenant - and where competition existed, prices were deliberately below cost to wage a price war - which inevitably saw the small operator go to the wall. Once the competition was extinguished, the duopolies prices reverted to the level charged across their range of stores.
There was wide dismay in the dairy industry when both of these behemoths decided to price milk at a dollar a litre. That put enormous pressure on the "farm gate "price of milk and saw a drop in the number of dairy herds. It is noticeable that the frantic Chinese search for safe child formula based on milk is concentrated on the New Zealand product, where a more normal price structure still exists.
The latest war front - is bread ! The duopoly has cut the price of a loaf of white bread from one dollar - to eighty five cents. In all probability, this is what is known as a "loss leader "tactic, the basic measure adopted in the early days of the supermarkets. By offering a basic essential at a below cost price level the customers are attracted and the supermarket more than makes up for this small loss by the margins on the other items purchased.
Bread moved out of the control of the big bread bakery companies after the fall of Saigon and the rush of Vietnamese asylum seekers to our shores. Their French training saw them establish family run "hot bread "shops that baked and sold seven days - and quickly that extinguished the fleets of bakery trucks going street to street, Monday to Friday - delivering bread to households. Now there are also a number of bread franchises offering speciality baking in most shopping malls.
This industry is adamant that the ingredients for a loaf of bread cost between 65 and 70 cents, and that it is impossible for a small bakery to make a living matching that duopoly price of 85 cents. It seems likely that the duopoly is again using it's power to dictate the price of what a consumer item reaches in the grocery market to attract customers to it's stores - and buy other items which compensate for the negligible margin on bread.
Customers battling to make ends meet will certainly welcome the return of very cheap bread, but if it decimates the rest of the baking industry it will inevitably come at a bitter price. Some nutritionists may wonder if price has downgraded bread quality - and when price is entirely in the hands of the duopoly - a price increase when the bakery industry has been decimated is simply a mouse click away across the chain's stores !
As a colourful politician once mused, the job of parliament is "to keep the bastards honest ! " The claim by the independent bread industry that an 85 cent loaf is unsustainable needs to be vigorously investigated. The duopoly publicly changed it's code of practice when it's method of dealing with competition became the subject of an enquiry and we obviously need an ongoing commission to have a look at situations where almost monopoly status delivers policies that are questionable.
It also raises the question - of when "big " becomes " too big " !
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