Blog - Global view

Australia's $4 question

John Kettle's arrival in Australia from Europe has thrown up some rather unnerving questions-namely what is everything so expensive and why is there so little choice?

No choice over price

Having  just  arrived in Australia after 20 years of legal practice in Ireland and the UK,  I am very struck by the lack of choice when shopping in many retail and consumer facing businesses. This is a place where even the most  basic  necessities in life come with a $4 tag. A morning latté costs $4. My well-deserved afternoon cup of tea  is $4. A decent loaf of bread costs $4. To further set the scene, the coffee carts with few overheads are no different in their charging rates. And all restaurants add a mandatory credit card charge on your bill. This is “Oslo Down Under” stuff.   Nor can I fathom why  Australia has just two supermarket chains nationwide with a spoonful of Aldi  thrown in - despite being a net exporter of wheat and other food commodities.  Let’s call it the $4 coffee question.

 

Australia’s entreprenurial prowress

 

The world benefits hugely from Australia’s natural bounty and its entrepreneurialism. This is the country which brought true professionalism to the commercial exploitation of sport - with Kerry Packer and Rupert Murdoch not only enriching themselves but also legions of professional sportsmen. In domestic everyday terms, the highly concentrated nature of local consumer markets may provide opportunities for expansion by international players as, in my opinon,  the Australian Competition & Consumer Commission (“ACCC”) must get to grips with the $4 coffee question.

 

Choice could be on the menu

 

In the last 10 days, the issue of retailer buyer power, choice and costs has begun to dominate the business pages.  Having being engaged in these issues in Ireland,  it will be fascinating to see the benefits  for both the Australian consumer  and international  food and retail businesses monitoring Australia for investment  when a comprehensive, legally enforceable code of conduct  by the food, grocery and retail industries launches shortly. John Durie in The Australian newspaper has noted this initiative as being aimed in part at assuaging the ACCC’s concerns in this sector. 

 

ACCC wades in

 

On the same day as John Durie’s article, the Australian Financial Review (“AFR”) was writing about the explosive growth of own label in Australia and how the ACCC is investigating claims that the two national supermarket chains are mis-using market power by favouring their own label brands over their suppliers’ branded product. 
Interestingly , the AFR quoted the NSW Farmers Association leader as saying: ‘There had been a view previously that you could not speak out for fear of retribution…  What we’re getting from our members is that they’re hurting, across a range of different industries.’

My experience of advising in this sector in Ireland corroborates  this type of sentiment. Indeed, the day when that $4 coffee gets some competition may not be that far away in Australia!

 

Posted by:

John
Kettle

07 March 2013

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