Woolworths 85 cent bread ‘gimmick’ will cripple independent supermarkets: Nick Xenophon

WOOLWORTHS has reignited the bread war with its 85 cent home brand loaves. But it probably won’t be great for your hip pocket.

INDEPENDENT senator Nick Xenophon is worried Woolworths selling its 85 cent Home Brand bread could spell a death blow to independent retailers.

Last week, Woolworths reduced its already cut-price $1 bread to a new low of 85 cents a loaf. $1 bread was introduced by both Woolworths and Coles in 2011 in their increasingly heated battle for domination in the supermarket wars.

The latest move by Woolworths has seen Senator Xenophon today calling for the reinstatement of anti-competitive price discrimination laws that were repealed in 1995.

“Woolworths’ latest discounting gimmick of 85 cent loaves of bread might seem appealing to consumers, but in the long run it will cripple independent supermarkets who can’t access bread at that price from suppliers,” Senator Xenophon said.

Nick Xenophon wants a return to price discrimination laws.

“When independents are pushed out of business that hurts competition and consumers too. Whether it’s milk, petrol or bread, why shouldn’t the competitors of Coles and Woolworths be able to access prices from suppliers at the same cost as the big two? Prohibiting this sort of price discrimination will level the playing field once and for all.”

He’s been a staunch critic of past discounting tactics on milk and petrol from major supermarket chains and will introduce a private members bill on the matter to the Senate in November.

In 2011, Coles fired the first salvo when it launched its discounted milk line. In the same year, a Senate inquiry investigating the impact of Coles selling $1 milk found the decision was a win for consumers and had not badly affected the Australian dairy industry.

But aggressive petrol discounting beyond 4 cents a litre by the two major supermarkets has been stopped by an order from the competition watchdog, the Australian Competition and Consumer Commission. The ACCC said the practice had contributed to a “substantial lessening” of competition in the retail fuel market.

$1 bread no longer.

A Woolworths spokesman told news.com.au: “Woolworths has listened to our customers who have said they would like help with their family budgets.

“Our 85-cent white Homebrand bread is a great quality bread at an everyday low price that will put a little extra money into the pockets of Australian families.”

Choice spokesman Tom Godfrey said while cheap bread was tempting, “the supermarkets always win”. “Obviously the supermarkets like discounting major products like bread or milk to try to get you in the store,” he said.

“While saving a couple of cents on bread might be beneficial, you’ve got to look at how much you’re saving across your whole shop. Write a list, stick to it, don’t be swept up by the hype of cheap bread.”

According to Roy Morgan, Coles and Woolworths control 72.5 per cent of the $82 billion grocery market.