Coles and ALDI join Woolworths in increasing milk prices

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The days of $1 a litre milk appear to be over as Coles and ALDI have announced they are following Woolworths in increasing prices to support Australian farmers.

From Wednesday 20 March 2019, ALDI and Coles will increase prices on their supermarket-branded fresh milk, with the additional proceeds going to dairy farmers.

Coles will increase the price of 2 litre and 3 litre Coles brand milk by 10 cents a litre, bringing costs to $2.20 and $3.30 respectively, with the new pricing to be rolled out across all stores in the coming days. Coles’ 1 litre milk is already priced at $1.20.

ALDI will also increase the price of 2 litre and 3 litre Farmdale fresh milk by 20 and 30 cents respectively. It already charges $1.15 for its 1 litre bottles.

The move comes after Woolworths announced its price increase in late February, stating it will deliver higher prices to more than 450 Australian dairy farmers supplying its own brand fresh milk.

The move brings an end to the eight-year milk price war between the major supermarkets, with Coles the first to drop prices to $1 a litre in 2011.

Coles Group Chief Executive Officer, Steven Cain, said: “Coles sources 100 per cent of our Coles Brand fresh milk from Australian farmers, many of whom are struggling as the impact of drought compounds ongoing challenges in the dairy industry.

“Coles supports proposals to make Australia’s dairy industry more sustainable, and we are continuing to explore long-term solutions with government and industry stakeholders.

“However, we know that many dairy farmers cannot wait for structural reform to be delivered so we are moving to provide relief right now.”

Coles says the milk price increase will not solve the challenges facing Australia’s dairy industry and acknowledges the Federal Government’s plan to deliver longer-term industry-wide solutions.

Oliver Bongardt, Managing Director of Buying, ALDI Australia, said: “Our decision to increase fresh milk prices has been reached in recognition of the significant issues currently impacting the dairy industry and the fact that broader government-led policy reform is unlikely to occur in the short-term.

“ALDI has already taken substantial action over recent months aimed at addressing issues confronting the Australian dairy sector. This has involved us accepting cost increases from our milk processors to cater for drought and associated issues, and we have been able to do so until now without passing higher prices on to the consumer.

“This solution is a short-term measure and will allow our processors to immediately pass additional funds to their dairy farmers outside of normal seasonal adjustments. At the conclusion of the current season, ALDI will work with processors to ensure that prices for milk reflect the current market conditions and support the long-term viability of the dairy industry.”

Reaction from dairy farmers

Australian Dairy Farmers CEO, David Inall, said in reaction to the news: “There is no doubt that this is a game changer in the fight against discount dairy that has long frustrated the industry.

“Removing $1 milk is not just intended to restore farmers’ financial confidence, but it will also boost confidence in regional communities and small businesses that rely on the industry.”

Canstar Blue research shows that one in three shoppers (33%) pick their supermarket based on the cost of grocery basics like milk and bread.

Woolworths Group CEO, Brad Banducci, said: “We’re acutely aware of the budgetary pressures facing many of our customers and have not taken this decision lightly. We believe it’s the right thing to do and a key step in shoring up fresh milk production in Australia. We’ll continue to work very hard to offer great value to our customers across their total shop,”

Woolworths’ own brand 1 litre milk is priced at $1.25, with 2 litre bottles costing $2.20 and 3 litre bottles $3.30.

Picture credit: ChameleonsEye/shutterstock.com

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