TIGHT economic conditions due to inflation, interest rates and other factors are being reflected in higher mince sales and a trend from red meat to cheaper white meat proteins, Coles said during its third quarter financial results release on Friday.
As part of a broader ‘Dropped and Locked’ price campaign, Coles recently lowered its prices on a range of beef mince and secondary slow cook beef items. That has been widely interpreted as being partly in response to cheaper cattle prices seen since late last year.
In releasing the company’s third quarter financial results yesterday, Coles departing group chief executive officer Steven Cain told investors sales and volume were up for the third quarter, despite mounting cost of living pressures for many Australian consumers.
A moderation in consumer hospitality spending (ie, eating out) and increasing immigration also supported sales growth last quarter, the company said.
Mr Cain’s replacement, Leah Weckert (pictured left), who starts in the role on Monday, told the Australian the company had witnessed strong growth in sales of private label groceries over the quarter ended 31 March, as households looked to save money. Shoppers were picking up cheaper cuts of meat, she said.
“We are definitely seeing customers trade into cheaper options at the moment, and this is happening in a number of areas. We are seeing customers trade down into lower-cost proteins, moving out of (more expensive) red meat into white meat,” she said.
The pressure on household budgets from rising food and grocery bills appears to be easing. Coles reported total supermarket price inflation of 6.2pc, down from 7.7pc in the second quarter. Within that figure, fresh food inflation (including fresh meat) was 4.1pc, compared with 7.1pc in the previous quarter.
The largest drivers of the moderation were in fresh produce and the meat, deli and seafood categories.
Supplier input cost inflation is expected to continue to moderate in the fourth quarter, largely as a result of elevated levels of inflation seen in the corresponding period last year.
Key financial highlights for Coles’ third quarter were supermarket sales revenue of $8.6 billion, up by 7pc on the same time last year, as the business cycled the impacts of COVID, floods in NSW and Queensland, and flooding in South Australia which led to logistics disruptions. Gross retail sales of $8.9 billion increased by 7.9pc and comparable sales grew by 6.5pc on the prior corresponding period.
Coles online supermarket sales grew another 2.7pc during the quarter with Coles customers now transitioned to unified enhanced digital platforms, across website and app.
During the quarter, Coles opened one new store and closed two others, taking the company’s total national network to 841 supermarkets. Rival Woolworths now numbers well above 1000 stores nationally.
Price has always & will always be the biggest consumer influencer.
Yet our industry leaders run around in circles tying us in knots with net-zero & a litany of other feel-good cost-adding nonsense that is near to irrelevant to actual consumer buying trends, whilst Australia’s domestic per person consumption of red meat continues to fall.
Will we ever wake up?