ALDI to ship fruit and vegetables direct to store, grower reports

IT’S the German chain that is already giving Coles and Woolworths a run for their money. Now things could get even better for Aussie shoppers.

THE price and quality of fruit and vegetables for Australian consumers could get better with reports German discount supermarket ALDI will ship produce direct to its stores.

Seven Fields Pty Ltd owner Greg McMahon, who sells oranges, mandarins, lemons, grapefruits and mangoes to ALDI already through distributors, told Reuters the supermarket has plans to set up a new distribution network to allow it to deliver from field to store.

“It’s not good news if you’re Woolworths and Coles. I think they’re scared already,” he said.

The move would be a blow to Australia’s major retailers who hold fruit and vegetables as central to their offering.

ALDI declined to comment on the plans but a spokeswoman for the company said a direct model would “provide efficiencies for our suppliers and values for our customers”.

“As such, ALDI will continue to explore a variety of supply chain models,” she said.

The family-owned German company has proved popular since revamping it’s Australian presence and is expected to continue to put pressure on Coles and Woolworths.

It comes amid speculation another German discount chain Lidl, which recently won grocer of the year in the UK, could open in Australia after applying for trademark protection and inquiring about logistics.

Ratings agency Moody’s told AAP this week a move by Lidl would threaten the billions in profits Coles and Woolworths reap in each year due to their dominance in the sector.

Senior analyst Ian Chitterer said the brand would probably cut prices forcing the others to follow suit.

“Woolworths and Coles will need to follow Aldi’s price reductions on their private-label products to maintain the gap and this will ultimately lower profitability because the volume of goods sold would remain broadly constant,” Mr Chitterer wrote in a report this week.

Moody’s estimates show Woolworths and Coles control more than 60 per cent of Australia’s grocery sector. Aldi has gained around 11 per cent which is expected to grow.

“We believe that if Lidl enters the market, the two competing discounters can increase their combined market share toward 20 per cent over the next five to seven years,” Mr Chitterer said.

This week Woolworths Chief Executive Grant O’Brien said he would step down after downgrading the company’s profit guidance by $300 million and axing 1200 jobs.