US find will enrage cash-strapped Aussies

It’ll make you see red but US shoppers can buy an Aussie made supermarket staple for less than you’ll find at Coles and Woolies for the identical product.

It’s enough to bring tears to the eyes of frustrated Aussies struggling with the soaring cost of living.

An iconic Australian product, made in Australia from Australian ingredients, is cheaper to buy 16,000km away from Australia than in Australia itself.

In a supermarket in New York’s Lower East Side, owned by the family behind Aldi, news.com.au found scores of 500ml bottles of Red Island extra virgin olive oil.

The brand is owned by Cobram Estates, Australia’s largest olive oil producer with an estimated 35 per cent of the domestic market.

Cobram Estates describes Red Island as “our oil,” which is “made in Australia, for Australia”, and their products are “positioned to attract a more price-conscious shopper”.

The product in Manhattan was identical to that which you can find in a Coles, Woolies or IGA.

The only difference was the price.

At this Trader Joe’s supermarket, Red Island olive oil cost $US7.99, which converts to $11.89 for a bottle.

Red Island extra virgin olive oil on sale for the equivalent of $12 in the US. Picture: Benedict Brook/news.com.au.

At a Woolworths supermarket just around the corner from where Red Island’s owner is based, in the Victorian town of Lara just north of Geelong, the same bottle will set you back $13.

Coles’ website also indicates that Red Island 500ml is $13, a dollar more than the US despite the extra sipping costs. At IGA stores prices can vary more widely.

Coles, Woolies: Don’t look at us

But both Coles and Woolworths have told news.com.au while customers might see red over Red Island, it’s not them that fingers should be pointed at.

At Coles, Red Island costs $13 for the same size bottle.

At Woollies, it’s also $13.

“There are a range of factors that can influence price, and we have no visibility over the costs and pricing strategies of overseas retailers,” a Coles spokesman told news.com.au.

These factors can include differing taxes, rent, and wages – or even just a better deal from the maker.

“We work hard to offer our customers in Australia great value and quality, and offer a range of olive oil brands at various prices,” the spokesman said.

Woolworths also pointed to its range of olive oils at different prices but didn’t comment on Red Island specifically.

US shelf prices do not include GST. However even with sales tax added at the checkout the olive oil is still cheaper in America than Australia, despite the extra costs of shipping.

Reader Joe’s, owned by the family behind Aldi, has 600 US stores.

Aussie product cheaper overseas

Queensland University of Technology marketing Professor Gary Mortimer said there were a number of ways identical, or at least similar looking, products to those in Australia could make it onto overseas shelves, sometimes for less.

A brand could be made overseas for a local market, such as Nestlé’s Milo. It was founded in Australia but is a favourite in Asia, African and Latin America.

Another is “parallel importing” where an Australian product ends up on an overseas supermarket shelf because it has been purchased by a distributor without the permission of the maker.

And a third is “opportunistic sourcing”.

“An overseas retailer will buy the ‘job lot’ at very low prices,” Prof Mortimer said.

“Essentially, this is what Red Island appears to have done. A one-off trial.”

Cobram Estate produced Red Island.

Aussie manufacturer responds

The Red Island oil was found in a branch of Trader Joe’s, which is owned by Aldi Nord, the German giant which also owns Aldi stores in many countries, although not in Australia.

Trader Joe’s has around 600 stores but in the US’s much more fragmented grocery industry its market share is a mere 1.2 per cent, far behind the 25 per cent of market leader Walmart.

The Red Island shelf label extolled to New Yorkers its Australian origin and “smooth and buttery profile”.

News.com.au contacted Trader Joe’s for comment.

Talking to news.com.au, Cobram Estates’ joint chief executive officer Sam Beaton acknowledged Red Island was currently cheaper in America than in Australia, but said it was simply a quirk of timing.

He said Red Island at Trader Joe’s was a “small trial”.

“We started speaking to Trader Joe’s in early 2023, providing both volume and pricing at that time.

“Since then the pricing in the category has increased significantly, including the pricing of our Red Island 500ml in Australia, which increased in April 2024 from A$10.50 to A$13.00 on shelf.”

Cobram Estate in California. The Australian company is now the night largest olive oil producer in the US.

Mr Beaton said because the Trader Joe’s price was locked in when the deal was done it couldn’t be raised and so was indeed cheaper than full price in Australia.

If the same deal were done now, Red Island’s US shelf price would “most likely be higher than Australia given the cost to freight the oil to the USA,” he said.

Mr Beaton said, overall, Aussie shoppers were potentially getting a better deal than their American counterparts.

“Coles and Woolworths run a number of price discount promotions throughout the year – which we contribute to,” he said.

“If you compare the weighted average discount on this product – taking into account the promotional prices – then the average price of Red Island in Australia is significantly cheaper than the converted $A12 at Trader Joe’s.”

Cobram Estate is the flagship brand in both Australia and the US, but the US version uses only Californian olives. PICTURE: ZOE PHILLIPS

“Legally we can’t tell the retailers what price to sell our product for,” Mr Beaton said.

“Shelf pricing is at the full discretion of the retailer, and of course different retailers make different margins”.

Australian owned Cobram Estates has been expanding aggressively in the US where it is now the ninth largest olive oil producer.

Its key brand in the US is called Cobram Estate, like in Australia, but it’s pricing is even more difficult to compare as the US brand is produced in America from Californian, not Australian, olives.

Mr Beaton said 98 per cent of Cobram’s Australian olive oil was still sold in Australia.

“We are not selling it at a loss,” he said of Red Island’s US foray. But it was a “lower margin,” than the company might have wanted.

It’s not the first time Aussies have been shocked by staples turning up cheaper overseas.

Last year an Australian living in Germany found a bag of 43 Finish dish washing tablets for the equivalent of $14.70 while at the time a similar bag in an Australian retailer was $54 when full price.