Woolies' cheap shot at Aussie meat

16 Jan, 2015 11:40 AM
Loss leaders are products sold at a price below their market cost as a strategy

THE Australian red meat sector greeted today's announcement by Woolworths of 29-cent sausages with a level of disappointment.

The retailing giant's 'Cheap Cheap' strategy with an Australian icon like the barbecue 'snag', especially in the lead-up to Australia Day, was seen as just the latest in a string of loss leader products.

Loss leaders are products sold at a price below their market cost as a strategy to stimulate other sales of more profitable goods.

From today, Woolworths is dramatically lowering the price of Homebrand sausages to $6.95 for a 24-pack.

Pitching the product as "Australia's cheapest sausage" and isolating the 29c cost per sausage in its marketing materials, Woolworths packaged the product as an affordable option for Australian families ahead of the approaching long weekend.

Woolies also linked its recent 85c loaf of bread pitch to the sausage campaign, bundling together what the retailer calls "everday staples".

Woolworths head of trading for meat, Jim Stephan, said: “Aussies love a snag especially over the summer so whether it’s on the barbie in the backyard or something quick and easy for dinner we know our customers will love the great price”.

“Australia Day is just around the corner so families can pick up a pack and enjoy a great Australian tradition and at the same time keep a little extra money in their pockets.

“It’s part of our ongoing commitment to give families great quality food at unbeatably low prices,” he said.

With the memory of the Coles-Woolworths duopoly's strategic 2011 use of milk as a loss leader product in what was dubbed 'The Milk Price Wars', many Australian farming families will be wondering if this Australia Day push by Woolworths will have similar long-term impacts on grain and red meat producers' farmgate incomes.

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16/01/2015 12:16:00 PM

Supermarket sausages @ 29c ea - still way too dear!! Do yourselves a favour and get quality snags from the local butcher. Supermarket snags are what the phrase "mystery bags" was coined for.
16/01/2015 1:22:16 PM

"Cheap Cheap" = "Garbage Garbage". The supermarkets strategy is doomed. They are following the same failed strategy of Tesco.
16/01/2015 3:02:06 PM

What a fantastic boon for the bluegum industries receivers! Demand for sawdust will go through the roof!
16/01/2015 3:27:08 PM

There's sausages and there's sausages. What's the difference? 1stly the mince that goes in does it come from vealers or old cracker cows? Top quality ( not seen very often) comes from better quality animals. 2ndly they all contain 'sausage meal' a blend of ground grains, flour etc. How much meal? Any bodies guess. Usually the cheaper the snag the more meal in it. 3rdly what weight is each snag? A 28mm dia x70mm long snag is only 81.3% of a 30mm dia x 75mm long one. It's likely Woolies aren't really making a loss.
16/01/2015 3:53:15 PM

Whatever. Linking Woolies' snags to quality Aussie beef is a bit of a marketing 'strategy' in itself.
Beef man
16/01/2015 3:53:43 PM

When prices go down in supermarkets suppliers always foot the bill
Mal Content
17/01/2015 6:49:37 AM

Not that I'm a cynic, but it's interesting that the bread price should be mentioned in the same article as it brings to mind the Coles debacle with "fresh locally made" that was imported from Ireland... got me wondering as to the reality of local meat and meal in the woollies snag. Seems the duopoly isn't above deceiving the purchasing public, screwing the Aussie producer,and importing inferior product to increase the bottom line. You certainly have to look bloody hard at the labels to work out content of the goods, and then the wording is deliberately ambiguous so as to hide the real data.
18/01/2015 5:13:35 PM

Put a GST on snags and farmers will get paid less for what goes in because supermarkets will not like to increase prices.
19/01/2015 1:29:09 PM

Go your hardest woolies, we'll be sending as much beef as we can overseas where it is sold a realistic prices ! Big beef shortage !
Cattle Advocate
19/01/2015 8:00:42 PM

With the continuing price war selling $1/lt milk at a loss that started on Aus day 2011. Choice's Christopher Zinn ''Unfortunately for farmers, like milk and meat producers, fresh food seems to be the battle ground where supermarkets are fighting hardest to win new customer loyalty and expand their 50pc share of that trade, compared with their 70-80pc share of dry grocery sales'' How much has $1/lt milk lost in Darwin in the last 4yrs, where the retail banana price can be dearer than down south and with the beef mince price war why havent Tim Tams been sold at a loss for 4yrs with more to come
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And this would ring a free market economy in a democracy. To bad so sad.
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Why don't farmers demand cash on delivery from any trader they have no record of performance
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I am in no position to comment on the issues between Culleton and the ANZ or the other farmers