Food innovation in Australia and the monopoly of market share

12 Jun Food innovation in Australia and the monopoly of market share

The reason why we don’t see very much innovation in food products in Australia is because of the monopoly of food retailers. In places like Europe and the USA, many more products are developed and marketed and consumed. Often new food products will have a life cycle of 6 – 12 months rather than 5 years, because so many products are introduced into the market and fail.

We have a unique situation in Australia because our food distribution is dominated by two major companies, Coles and Woolworths (or Safeway as it used to be called in Victoria). This combined market share of more than 70 % means that new food producers are less able to develop new and innovative food products.

Coles and Woolworths promote their own labelled foods, such as Select or Macro (Woolworths), and organise the position of foods on their shelves to increase sales of their own brand of products. For existing food retailers, shelf space in Coles or Woolworths can be what ensures their success. However, this market share dissuades food producers from trying to launch a new food product.

Innovative products can solve consumer problems

Here are some of the products that we are missing out on in Australia because of the monopoly of Coles and Woolworths. I am particularly interested in the night foods and fruit soup. They sound like very interesting products.

We do get to see some of these products in smaller, specialty retailers like wholefoods and health food stores. Items like the kale crisps are more common in those sorts of shops. If you want those shops to stick around though, you need to shop there more often. Coles and Woolworths are so convenient , but all your money (a not inconsiderable sum over the course of a year. For me, I spend about $100 on food and alcohol each week, not including discretionary cafe food. Over 50 weeks this would add up to about $5000 a year) is going to this huge corporation, instead of some smaller, family businesses or small businesses.

How to shop local rather than with the two giant supermarkets

I have been pondering this, and really want to support local smaller retailers. I am going to split my weekly shopping list up and spend more money in the local fruit and vegetable shop, and butcher as well as the wholefoods grocery store. It might be a little more effort, but this is a small price to pay for supporting smaller businesses.

I want to support innovation in the food industry, and I want to support farmer’s and their families. Who knows? Maybe this will be crucial to safeguarding our food supply through the process of climate change.