Costco could spark another fresh milk price war – reports

Australia’s fresh milk price war looks set to reignite, with wholesale retailer Costco reportedly planning to sell bottles for less than the 96 cents per litre that it already does.

Costco currently sells three-litre bottles for just $2.89, undercutting most of its supermarket rivals, with $1 per litre milk typically the cheapest available from Coles and Woolworths.

Costco Australia Managing Director Patrick Noone reportedly told the American Chamber of Commerce that he was seeking milk “even cheaper than we have today, but the same quality” to fill the company’s Kirkland brand.

When approached by rural news publication The Weekly Times, Costco refused to comment on the issue.

Australia’s fresh milk price war has been raging for several years, since the launch of the Coles ‘down down’ promotion in 2011. But while consumers are left with cheaper milk, it’s the dairy farmers that have lost out.

Dairy farmers fear Costco’s move to find milk less than 96 cents a litre would lead to another round of discounting by the other supermarket giants – Coles, Woolworths and ALDI – making prices even lower.

Katunga dairy farmer, Daryl Hoey, has had his fair share of difficulty in the battle, being hit hard by the slashed prices.

“I’m sick to death of companies or organisations supplying cheap milk into the marketplace,” Mr Hoey told The Weekly Times.

Queensland dairy farmer Ross McInnes also knows all too well the impact that $1 per litre milk has on his local industry, with the state’s lobby group actively fighting against it.

“Any processor stupid enough to enter into a deal that will end up with even cheaper milk, is no friend of Australian dairy farmers,” Mr McInnes said.

“We (Queensland) will lose 5 to 6 per cent of our farmers this year and any further discounting will only increase that number.”

Costco currently operates nine warehouses across Australia, including three in Melbourne and another under construction.

What is Australia’s favourite milk?

According to a recent survey by Canstar Blue, ALDI Farmdale fresh milk was found to be the top-rated in Australia, with consumers scoring it five stars on taste and value for money. Home brand fresh milk from Woolworths was rated four stars overall, but five stars for value, while Coles private label milk was rated three stars overall and four stars for value.

Big name brands Dairy Farmers, Harvey Fresh, Norco, Pauls and Farmers’ Own all scored four stars for value and overall satisfaction, with A2 Milk, Brownes, Devondale and Zymil scoring three overall.

When asked about the current dairy industry battle, nine out of ten survey respondents (90%) said they think the supermarkets should do more to help Australian dairy farmers, with 68% claiming they would be happy to pay more for supermarket private label milk if some of the money went to the farmers.

Two-thirds of consumers (66%) said they always buy the same brand of milk, with 42% saying they always go for the cheapest option.

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