Nosh's $1-a-litre milk "a great gimmick" says Foodstuffs

Wednesday 8th February 2012 7 Comments

Foodstuffs, the supermarket cooperative with about half the New Zealand market, has scotched reports its Pak ‘n’ Save stores have embarked on an Australian-style price war for milk in response to a rival’s $1/litre promotion.

Customers have been flocking to Auckland-based boutique supermarket chain, Nosh, to buy its Cow & Gate milk at $2 for two litres, a 55 percent discount. Nosh said the price cut, which runs until the end of the month, was to “raise awareness of the issue of high milk prices in New Zealand.”

“Nosh’s price drop on milk is a great gimmick designed to drive customers into a store where the majority of products are significantly more expensive than your average supermarket,” said Rob Chemaly, general manager retail at Foodstuffs Auckland. “We don’t believe this type of price discounting is sustainable.”

Chemaly denied reports that a Pak ‘n’ Save store in the Waikato had already lowered prices in response to Nosh but said supermarket owners could set their own prices “and it is possible some stores may choose to offer further discounts.”

In Australia, angry dairy farmers have demanded a Senate inquiry after supermarket giants Coles and Woolworths slashed the price of milk by 33 percent to A$1 a litre, squeezing payments for raw milk and costing farms in New South Wales alone some $15 million last year.

In New Zealand, where there’s a parliamentary inquiry into what are seen as high milk prices and criticism of Fonterra Cooperative Group’s role in pricing, Federated Farmers has welcomed the prospect of a retail price war, saying that’s where the blame for high prices should lie.

“Frankly, Nosh is doing more to open up competition at the retail end than any narrowly focused inquiry can ever achieve,” said Federated Farmers Dairy chairman, Willy Leferink.

“If you remove our GST and price that milk in Australian dollars, then it works out to be equivalent to A$1.01 per litre,” he said. “That’s only one Aussie cent more than what Coles is selling its milk for in Australia - milk Coles is spending a lot of money each week underwriting.”

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 8 February 2012 at 4:54 pm Alberre said:

This is simply a bit of of marketing nonsense from a retailer that is probably one of the more expensive food retailers in Auckland.Free advertising. They might sell the milk but i bet they don't sell much else at the same time.

On 8 February 2012 at 5:39 pm Don said:

No different to what Foodstuffs & Countdown do with beer, loss leaders they're called.I.E. same gimmick

On 8 February 2012 at 5:56 pm Anthony said:

Well just to dispell some of the nonense spoken above I purchased from Nosh Ponsonby Road...size14 Turks brand (the best tasting chicken available)two in a pack for thirteen dollars per pack. New World Victoria Park had them on special late last year for ten dollars each. So who is ripping us off?

On 9 February 2012 at 9:08 am Tulip said:

For a land of Milk and Honey the price of milk that we are paying is definitely very high !! I totally agree with Nosh's comment to “raise awareness of the issue of high milk prices in New Zealand”. Hopefully this should bring the price of milk down in the other supermarkets too.

On 9 February 2012 at 9:14 am Geoff said:

to the first two whingers, the solution is simple - dont buy from Nosh. This will leave more quality milk at great prices for the rest of us who need this essential product. And yes I know its a loss-leader and a marketing ploy, but good on them for doing it on what is an essential product, unlike cans of coke or chocolate bars.

On 9 February 2012 at 12:35 pm John Maffey said:

Fully agree with Geoff above. Both Foodstuffs and Progressive are hypocritical to criticise Nosh when they use Tv and print advertising every day to promote their "specials" or loss leaders and then recover their margins by milking the public with their prices of essentials like milk, bread, fruit and veges.Unlike Nosh who have shown a social conscience, the supermarkets are fully focused on maximising profits at NZ families' expense.

On 10 February 2012 at 11:19 am Roger said:

If dairy farmers are doing so well why not become a dairy farmer? Perhaps start with a 'house cow' on the back lawn!