Woolworths, Aldi increase their slices of the pie in 2018

Woolworths has increased its lead as Australia’s top grocery retailer, boosting its share of Australia’s total grocery market to 34% in 2018, up 1.4ppts from a year ago, according to Roy Morgan’s latest survey data contained within the Supermarket & Fresh Food Currency Report.
While Woolworths increased its market share, the newly independent Coles now has a share of 27.6% of the total grocery market, down 1.6ppts on a year ago. German supermarket Aldi has had a good year in 2018, growing its market share to 11.4%, up 0.5ppts from a year ago.
The other winners over the past year were Other Supermarkets outside the ‘big four’ such as 2018 Roy Morgan Supermarket of the Year Award winner Foodland, Foodworks and other supermarkets that increased their share of the total grocery market to 9.1% (up 1.2ppts), while IGA’s grocery share was down 0.4ppts to 7.1%.

Total grocery market – % market share 2017 cf. 2018. Source: Roy Morgan Single Source. Base: Grocery Buyers 14+, Jan-Dec 2017, n=12,312, Jan-Dec 2018, n=12,310.

Woolworths dominance is built on strong leads in key fresh food categories with the Sydney-headquartered retailer holding the largest market share in dollar terms for fresh meat, fresh deli, fresh bread and fresh fruit and vegetables ahead of Coles, Aldi and IGA supermarkets.
Over the last year Woolworths has grown its market share in dollar terms across all four fresh food sub-categories and increased its lead over nearest rival Coles. The two brands currently dominate Australia’s fresh food markets holding over 50% of each of the fresh food markets.
The December Supermarket & Fresh Food Currency Report is compiled from data collected as part of Roy Morgan’s Single Source survey, which involves more than 50,000 in-home, face-to-face interviews each year, including more than 12,000 detailed surveys of grocery and fresh food buying behaviour.
Roy Morgan CEO Michele Levine said the impressive performance of Woolworths over the last year has Australia’s leading grocery retailer in a strong position to deal with the entry of German ‘hypermarket’ Kaufland into Australia’s $100 billion+ grocery market.
“Australia’s leading supermarket chain Woolworths has increased its lead in the increasingly competitive grocery market in 2018, now capturing over a third of Australia’s total grocery spending in 2018 – up 1.4ppts to 34% from a year ago.
“The successful year for Woolworths has been built upon strong performances across the four key categories of fresh food. Woolworths has grown its market share in dollar terms for fresh meat, fresh deli, fresh bread and also fresh fruit and vegetables, and is the market leader in all four categories ahead of main rival Coles.
“The demerger of Coles Group from industrial conglomerate Wesfarmers in the December quarter of 2018 means Australia’s second largest supermarket chain now has the opportunity to refocus on its core business ahead of the imminent arrival of German retailer Kaufland.
“Kaufland has already bought six industrial sites in Melbourne at which it plans to open its successful ‘hypermarkets’ over the next two years before rolling out stores Australia-wide following in the footsteps of fellow German retailer Aldi. Aldi also had a good year in 2018 and grew its share of the total grocery market by 0.5ppts to a new high of 11.4%.
“In addition to Kaufland, the Australian grocery market is also anticipating a rollout of the ‘Amazon Fresh’ brand in the near future after the American Internet giant launched a food and grocery segment (although not yet fresh food) in the December quarter 2018.
“The increasingly competitive $100 billion+ grocery market in Australia means it is more important than ever for companies operating in the grocery and fresh food sector to track precisely where their customers, and future customers, live, work and shop,” Ms Levine said.

FoodWorks chooses CEVA over Metcash

Independent retailer FoodWorks has announced its plan to manage its own private label warehousing and logistics through a partnership with CEVA Logistics.

With the new supply chain arrangements, FoodWorks aims to increase the presence of the house brand products on the shelves, from the current 5-6 per cent of total product lines to 10-15 per cent over the next two to three years. 

Speaking at a recent conference, FoodWorks’ CEO Peter Noble said the move was to lift its competitiveness over major local and international players in the supermarket sector.

“As the industry become ever more competitive, with new formats like Aldi and Costco developing networks in Australia, our focus has narrowed in on developing and enhancing our private label offer and on new business and property in order to grow our business,” he told the conference.

FoodWorks, which operates over 700 supermarkets nationwide, is one of the biggest customers of grocery wholesaler Metcash.

The new partnership will see Metcash’s IGA Distribution no longer distributing FoodWorks’ ‘Best Buy’ products, giving FoodWorks greater control over their house brand products.

Dismissing concerns over the new agreement, Metcash chief executive Andrew Reitzer said it would not affect the company’s sales of profits.

“It is a ‘win-win’ situation for both Metcash and FoodWorks,” Mr Reitzer said. 

Currently the IGA Distribution division handles 79 Foodworks ‘Best Buy’ exclusive private label products, which bring annual sales of $5 million to the division.

“Of the 79 ‘Best Buy’ products, 62 are uneconomical for us to handle as their turnover is 20 or less cartons per warehouse per week.

“By FoodWorks moving the ‘Best Buy’ products to CEVA, IGA Distribution will be able to make more efficient use of valuable warehouse space,” Mr Reitzer said.

He said Metcash would continue to supply its ‘Black & Gold’ generic products to FoodWorks retailers under a long-term supply contract, which expires in 2012.

The new agreement will start this month, with CEVA expected to service the entire FoodWorks network by next year.

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