Australia’s two major grocers are ”drunk on market power” according to Senator Nick Xenophon, responding to revelations that brewer Foster’s halted shipments when it learned of big supermarkets’ plans to sell slabs of beer below cost.
Foster’s, though, came in for flak of its own for its actions from a leading consumer group.
Advertisement: Story continues below “If the big supermarket chains can use their enormous market share to crush competitors, they will ultimately decrease competition and beer prices in the future will go up, not down,” said the independent senator from South Australia.
Senator Xenophon drew comparisons to the so-called milk wars in which the two dominant supermarket chains, Coles and Woolworths, have slashed the cost of milk in order to win market share. The deep discounting, however, has led to charges that the dairy industry’s viability is being threatened.
“Forget about Coles’ claims about prices going down,” said Senator Xenophon. “What we are seeing is entire industries going down just so Coles can steal customers from Woolworths and the independent supermarket chains.”
Beer looks like becoming the latest front in a widening price war over items typically found on household shopping lists such as milk, bread and eggs.
In February Senator Xenophon announced an inquiry into the impact of retail milk price war on Australia’s dairy farmers.
“The door remains open for a wider inquiry into a number of products after we resolve the milk inquiry,” said a spokesman for Senator Xenophon.
For their part, Woolworths and Coles both denied they engaged in a price battle over cheap beer.
Choice consumer group spokesman Christopher Zinn said the decision by Foster’s underscored the brewer’s excessive market power, which undermined independent grocers’ ability to compete in the retail beer market.
“It shouldn’t be up to how much market power you have in terms of a supplier whether you let your product go through or not which determines whether a discount happens,” said Choice consumer group spokesman Christopher Zinn.
He said the brewers were selectively observing one part of trade law by restricting the sale of beer because it was being used in a loss-leading promotion.
Previous research by Choice showed independents were unable to purchase beer at the same price Coles and Woolworths secured from the brewers, said Mr Zinn.
“If brewers are so concerned about the potential of the supermarkets to damage to their brands, they should really sell their slabs of beer to independents on similar terms that they do the two big guys,” said Mr Zinn.
Choice’s Mr Zinn and Mr Xenophon both called for action from the Australian Competition and Consumer Commission on the beer pricing.
“The ACCC seems to work incredibly hard finding new ways to tell Australian consumers why they can’t do anything,” said Mr Xenophon.
The ACCC, meanwhile, declined to comment.
Australian Hotels Association of New South Wales is also understood to be unhappy with the behaviour of the grocery chains. They say a flood of cheap beer can raise the incidence of alcohol abuse – which is typically blamed on the hotels industry.
“It’s quite surprising that in this on-going debate around alcohol-related violence in the community that the proliferation of massive bulk discount liquor barns goes unquestioned,” said AHA NSW chief Sally Fielke.
“How can we genuinely tailor solutions to anti-social behaviour whilst ignoring these liquor barns selling beer cheaper than water? It’s irresponsible,” she said.
At the same time, though, consumption of beer at home tends to sap revenue for pubs.