Woolies stretches footprint in retail beef space

Jon Condon, 10/08/2014

WOOLWORTHS continues to enlarge its footprint in the national domestic beef retail marketplace, widening its advantage over major competitors Coles and independent butchers in the latest monthly retail market share survey.

meat-retailThe Nielsen Homescan* survey covering the month and rolling quarter to June 16 indicates that for the latest rolling quarter, Woolworths hit an all-time record retail beef market value share of 34.2 percent.

It exceeds the company’s previous high point of 34.1pc recorded two months earlier, and effectively means that since July last year, Woolworths has picked up an additional 2.4pc of all beef sales across Australia. That’s an astonishing result, in the context of a retail market where movement is often measured in fractions of a percent.

With the exception of May, where it recorded a setback in value share, Woolworths has recorded six consecutive months of share growth. This time a year ago, the company sat at 31.8pc of total beef sales across Australia, according to Nielsen data.

Since January, Woolworths has for the first time controlled more than one third of Australian retail beef turnover, by value.

Part of the explanation for the result is that the nation’s largest supermarket chain now operates 920 stores across Australia, adding close to 100 new sites to its portfolio since 2010. Nearly 40 more supermarkets were operating in the group’s third quarter ended March 31 than the same period last financial year.

That suggests it is both organic beef sales growth in existing outlets, plus the growing number of new stores, which is driving the company’s retail value share performance. Two years ago, Woolworths’ share was 3.3pc less than what it is today, at 30.9pc.

Biggest rival Coles occupied 24.3pc national retail beef market share in the latest Neilsen survey, unchanged from the previous month, but still reflecting a gentle decline since the recent high point of 24.8pc back in January and February. After a period of rapid growth in retail share from late 2012, Coles’ performance has eased gradually since the middle of last year.

Coles $5 minceThe recent advances by Woolworths appears to have come at the expense of most of its retail competitors.
Independent butchers’ retail share last reported month was 21.2pc, continuing a long, gradual two-year decline in share. Butchers have lost 3.4pc of retail value share, mostly to the two large national supermarkets, in the past 18 months.

Supermarket retail price wars have obviously been a contributing factor, with Coles $5/kg three star mince (83CL) acting as a loss-leader, dragging customers away from the independents.

To put that retail price, launched in July last year, into context, Australia’s wholesale price for 90CL lean beef for export to the US was last week was quoted at  A$6.18/kg. That’s before retail packaging, distribution, shrink etc.

Even Woolworths’ equivalent regular beef mince ($6.99/kg, min 1.5kg pack weight) looks too cheap, in that context.



Smaller supermarkets mixed

Smaller national supermarket chains recorded mixed results in the latest Nielsen monthly survey.

The independently-owned IGA group logged a 9.1pc share for the June rolling quarter, easing from 9.3pc the previous month, and down 1.2pc in national beef share since November, when IGA was advertising heavily.

Another mid-tier supermarket retailer, Aldi, continues a strong growth performance recording a 7.5pc market share in the June rolling quarter, continuing a gradual 0.8pc rise since December, while the ‘other’ supermarkets grouping, including the likes of Costco, independent supermarkets and others, remained stable at 3.7pc.

Readers should note that the Nielsen figures published here are based on rolling quarterly figures, not single monthly registrations, because they are considered to be a more accurate reflection of longer-term trends.


Overall fresh meat sales value down

For the latest rolling quarter ended June 16, the Australian fresh meat category (beef, chicken, lamb, pork, seafood) recorded an increase in value of 3.1 points, compared to the same period last year. This was driven by a small (2 point) increase in spend per visit, coupled with a 1.6pc increase in spend per buyer.

Beef’s value share of that overall expenditure on fresh meat protein decreased by 0.04 percentage points over the most recent quarter compared to the same period a year ago, due mostly to a decrease in volume per trip. Lamb’s value share also fell compared with the same June quarter last year (-0.78pc), mainly influenced by and 11pc year-on-year increase in price.

Value share for most other proteins rose over the same period a year ago, with chicken up marginally (0.06pc), due to rises in spend per trip and spend per buyer, while pork increased 0.93pc in value share due to higher spend per buyer and spend per visit.

The decline in beef price is undoubtedly linked to the huge rise in kills seen in 2013 and early 2014 due to widespread drought, which added supply-side pressure. Intensively-raised chicken and pork were much less exposed to drought, provided feedstuffs were not affected.

It’s important to note, however, that the prices reported by Nielsen are measured as the average $/kg value of the items in the surveyed consumers’ shopping baskets. It does not attempt to represent the overall average value of beef and other proteins being sold in the retail marketplace.

Under these terms, beef recorded an average price of $10.06/kg for the June 16 rolling quarter (+24c/kg on this time last year); chicken $8.15c/kg (-4c/kg); lamb $12.27c/kg (+$1.23c); and pork $10.98/kg (up 65c).


Retail fresh meat category share

In other information of value in the latest Nielsen survey, beef easily retained the highest share of all meat sales against competing proteins, responsible for 37.1pc by value of all meat sales, up 0.4pc on a month earlier, and similar to this time last year.

Chicken filled second place on 26.9pc of total meat protein sales, the same as last month and slightly better than a year ago. Lamb was third with 12.71pc, down 0.8pc on a year ago, while pork was fourth with 11pc of total meat protein sales, about 1pc better year-on-year.



* What is Nielsen Homescan?

  • A consumer panel of 10,000 households
  • Demographically and geographically representative of all Australian households
  • Electronically record their household purchases of all grocery foods (fresh and packaged)

How are panel participants recruited?

  • Households are recruited on-line via a random sampling method
  • The Homescan panel is stratified by life stage, region and household size
  • Households are screened to assess suitability and to ensure they do not work in marketing, market research or FMCG.





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