Coles and Murray Goulburn announce their engagement

I got out of bed even before the roosters started crowing this morning as I was heading off to Perth to speak at the Agconnect Conference. I checked my emails first thing (as you do) to see if anything earth shattering had happened.

Low and behold something mind-blowing had definitely been announced overnight. Dairy farmers have been predicting Australia’s largest dairy co-operative Murray Goulburn would be storming the NSW/Victorian border since well before deregulation and overnight they did just that announcing a 10 year deal to supply the Coles home brand label

Exciting times indeed. Anybody who has met or heard  MG CEO Gary Helou speak  knows that  here is a man who is force to be reckoned with and he certainly has an innovative big picture vision for Murray Goulburn on the world wide stage. So I for one will be watching  with great interest to see if MG’s move to the domestic dark side provides a bright future for NSW and Queensland dairy farmers

Achieving this will be no easy gig. Woolworths and Coles have been rapidly increasing their stranglehold over supermarket market share highlighted by this Sydney Morning Herald article “Coles and Woollies put the screws on their competitors” ever since Coles got fair dinkum in 2008.

Woolworths is not only the most profitable supermarket in Australia, it is the most profitable supermarket in the world ( Coles comes in third after Wal-Mart)

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Supermarket Retail Margins

Will the Coles and MG partnership be a marriage made in heaven?. Time will tell.  What I do feel is this move by Murray Goulburn is the change we desperately needed to happen. If his reputation is anything to go by Gary Helou is just the man we need to show the leadership and drive required to ensure dairy farmers supplying Coles get a fair deal

Just a quick reflection on this race to the bottom marketing strategy Coles and Woollies are determined to play out I am with Naked’s Adam Ferrier when he says

“Being the cheapest is a promise to nowhere. I fear the current marketing strategy is buying footfall, whilst eeking out anything aspirational the Coles brand had.

“Marketers will have a difficult time re-building the Coles brand after this current bout of Coles ‘the cheapest, daggiest, un-aspirational place to buy your groceries from’ has finished.

“You can’t just be the cheapest and sustain market share. Cheap still needs to be aspirational or fun or clever… Cheap is also increasingly starting to mean ‘we’re squeezing our suppliers’, something consumers don’t want to hear.”

So maybe this new way of doing business will be a win not only for farmers but also a big win for people power. Australian consumers have stood up and told the supermarkets enough is enough. Look after our farmers or we will vote with our very loud voices.

To see what some of the industry heavy weights have to say head on over to Milk Maid Marian’s excellent blog on this topic found here

This interesting comment from Simone Smith from the Weekly Times MG Finally Makes it Mark 

Statistics are from http://www.daff.gov.au/__data/assets/pdf_file/0007/2269762/aus-food-statistics-2011-12.pdf