Coles cuts price of 1kg cheese blocks as cost of living bites Aussie household budgets

Coles is slashing the price of cheese to help Aussie shoppers — but not everyone is happy as the dairy industry faces a bigger battle.

Coles is slashing the price of one kilo cheese blocks to help shoppers struggling to keep up with cost of living pressures.

From Wednesday, the supermarket’s own brand 1kg cheese blocks including Australian Colby Cheese, Australian Tasty Cheddar and Australian Light Tasty Cheddar will be reduced from $13.90 to $9.50.

The cuts represent a 31.65 per cent saving.

The 12-week deal will be funded by Coles, to ensure farmers are not out of pocket.

Coles own brand cheese is locally made in Cobram, Victoria, by Saputo Dairy Australia, and the supermarket has direct contracts with dairy farmers in Victoria, southern NSW, South Australia, WA and Tasmania to supply more than 490 million litres of milk each year for its home-brand milk and cheese products.

Coles has recently had an oversupply of milk and because of its direct dairy sourcing model, it has been able to move volumes into producing key lines that customers are buying such as the 1kg cheese block.

Dairy Australia Head of Economics, Data and Insights John Droppert said ‘everyday’ cheese (mainly cheddar) currently averages around $15/kg in supermarkets, with private label products slightly lower at $13/kg on average.

He said labour costs as well as a shortage of wrokers, energy costs and red tape remain ongoing pressures for dairy farmers, which affects prices but major challenges include weather and feed prices (grain and hay).

Estelle Rose, 24, with a stringy cheese toastie. Picture: Martin Keep

“Dry weather across many dairying regions in these states reduced pasture growth through autumn and increased the pressure on feed pricing, at a time where new season farmgate milk prices (for those supplying the main manufacturers, and not on multi-year agreements) decreased by around 15 per cent,” he said.

“This is likely to result in a tightening of milk production as farmers reduce herd numbers to balance feed supplies and manage risk.”

The deal comes as the major supermarkets have been grilled at a Senate inquiry investigating how they set prices and use their market power.

Coles has reduced the cost of their 1kg block of Own Brand cheese. Picture: Supplied

Dairy farmers have also been battling cheaper imports from New Zealand in particular.

Australian Dairy Products Federation Chair John Williams said the aggressive promotion of home brand dairy products removes significant value from the Australian dairy value chain.

“Any decision to lower the price of private label products impacts our Australian dairy processor members who turn 90 per cent of the milk produced by Australian dairy farmers into the products we know and love,” he said.

“Retail sales data shows dairy sales are slightly down or flat and consumers are continuing to

favour private label and discounters, which is most often imported product.

“Australian dairy processors are battling for shelf space against well-established imported

products.

“The contracts are locked in, food service operators have accepted overseas dairy products

and even if Australian products become more price competitive, it will take years to unwind

these established arrangements.   

“Coles’ reaction is to try and compete with the imported products that have been heavily

discounted against the local offering from the other major supermarkets.

“However, the real victim here is Australian homegrown brands.”

Australian Dairy Farmers president Ben Bennett said the promotion shows Coles has recognised the power dairy products have to draw people in.

“This promotion means shoppers at Coles will get exceptional nutritional value for their dollar by buying dairy,” he said.

Originally published as Coles cuts price of 1kg cheese blocks as cost of living bites Aussie household budgets