Monday, November 4, 2024

Grocery prices compared between Australia, UK, NZ and Ireland — who comes out on top?

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We all know the cost of groceries has gone up in Australia.

But would your shopping be cheaper in comparable countries like New Zealand, the UK or Ireland?

Sainsbury’s is one of the popular supermarket chains in the UK. (ABC News: Adrian Wilson)

Now, you can see for yourself.

Researchers from Edith Cowan University have collected and compared the prices of some common supermarket staples.

Here’s how Australia’s duopoly performs compared to other leading supermarket brands overseas — Sainsbury’s, Tesco, Pak’n’Save, Countdown and Dunnes.

Associate Professor Flavio Macau and Dr Alex Wang collected data on 44 grocery items between April and May this year.

The above table shows a sample of their findings.

They wanted to check how Australia stacks up to similar markets overseas and whether the Coles and Woolworths duopoly is to blame for high grocery prices.

“If the situation is a lot better elsewhere, Australia should learn from other countries and take the necessary steps to change its market,” Dr Macau said.

A shopfront with flowers for sale

The UK was slightly cheaper than Australia for milk. New Zealand fared far worse though. (ABC News: Adrian Wilson)

How does Australia compare?

First of all, let’s look at the cost of groceries in Australia.

Food prices at Coles and Woolworths rose by 9.6 per cent over the past 12 months to April.

But the price difference between the two major supermarkets is small.

Colourful tins, jars and boxes on a kitchen pantry shelf.

The study found a standard basket of groceries in Australia is less expensive than New Zealand. (ABC News: Ebony ten Broeke)

Dr Macau found in a grocery trolley of 50 products, the cost of 45 products was the same at Woolworths and Coles.

The overall price difference on a $300 shop was less than a dollar.

Fruit and vegetables on supermarket shelves

The UK’s two leading supermarkets generally had a bigger difference in price between them than Coles and Woolworths in Australia. (ABC News: Adrian Wilson)

Yet Choice found an Aldi trolley of groceries was 25 per cent cheaper.

“While we do not go as far as to say that Woolworths and Coles control prices, they possibly monitor each other’s moves very closely,” Dr Macau said.

This could mean the big supermarkets are either in a battle to the bottom on price or a cruise to the top.

“To better understand what’s happening in Australia, we compared it with overseas markets,” Dr Wang said.

Is there more competition overseas?

Customers walk past the entrance to a supermarket.

In the UK, Tesco and Sainsbury’s account for 42 per cent of the market. (ABC News: Adrian Wilson)

The comparison looked at the two largest supermarkets in each country, to mimic Australia’s Coles-Woolworths duopoly, which has 65 per cent of the market share.

In New Zealand, there’s a similar duopoly — Pak’n’Save and Countdown (New Zealand’s brand for Woolworths) hold 70 per cent of the market.

In the UK, Tescos and Sainsbury’s account for 42 per cent of the market.

While in Ireland, Dunnes and Tescos hold a 45 per cent share.

packaged meat

The study compared the price of common grocery items. (ABC News: Adrian Wilson)

Dr Macau found prices varied significantly more overseas between supermarkets compared to Australia.

“While differing prices suggest more choice for consumers, this alone does not confirm that Australians are worse off,” he said.

Which country is the winner?

To make a fair comparison Dr Macau and Dr Wang found unit prices for each grocery item and applied exchange rates to have all prices listed in Australian dollars and added up the cost of a trolley full of groceries.

The total cost of the so-called “basket” of groceries (language used by the researchers but in actual fact more like a trolley full) is the sum of all 44 grocery items tracked in the research. 

Here’s the winning order on price alone:

  1. UK — on top with the lowest prices, with the cost of the groceries ranging between $283—$297.
  2. Ireland — next cheapest with prices ranging between $313—$345.
  3. Australia — in third with the price the groceries between $324—$332.
  4. New Zealand — the most expensive with a cost ranging from $342—$409.
A graphic of a shopping basket and price dockets behind it.

The UK came out on top. (ABC News: Paul Yeomans)

But, that’s not quite the full story. The average wages of workers are different between the countries.

Dr Macau and Dr Wang compared the prices to wages, calculating how many hours a typical person would need to work to buy the trolley load of groceries.

“Ireland does not hold second place if we consider wages. In Ireland, you need to work an additional one to two hours to afford the same basket of goods in Australia,” Dr Macau said.

Supermarket shelves lined with juice

The UK beat the others for the lowest prices, the study found. (ABC News: Adrian Wilson)

When adjusting for wages, Australia’s grocery “basket” is the second cheapest:

  1. UK
  2. Australia
  3. Ireland
  4. New Zeland

Dr Macau said, based on median incomes, both Australian and UK shoppers spent about 13 per cent of their wages on groceries, which includes food and non-food items.

“This data illustrates that while supermarket checkout prices are a genuine concern, Australians are not alone in facing the issue — similar countries are experiencing comparable struggles,” he said.

Action taken against Australia’s supermarket duopoly

Coles recently posted a $1.1 billion profit for the 2023-24 financial year, up 2.1 per cent on the previous year.

While Woolworths experienced a 93 per cent drop in profit to $108 million, partly due to its operations in New Zealand.

Colourful tins, jars and boxes on a kitchen pantry shelf.

Multiple inquiries are currently underway into the supermarket set up in Australia. (ABC News: Ebony ten Broeke)

Multiple inquiries are underway into the supermarket set-up in Australia.

Australia’s competition watchdog has launched legal action against Coles and Woolworths, accusing them of increasing prices on products only to later advertise them as discounted.

Coles says it takes compliance with Australian consumer law extremely seriously and intends to defend the proceedings, while Woolworths says it will review the claims and continue to engage with the consumer watchdog.

Researchers suggest breaking up the duopoly might be ‘counterproductive’

A man wearing a black puffer jacket and light blue collared business shirt with a sandstone building in the distance.

Tasmanian senator Nick McKim says Australia’s supermarket duopoly needs to be broken up. (ABC News: Sebastian Baltyn)

The federal Greens are calling for the supermarket duopoly to be broken up.

“Coles’ $1.1 billion profit is a sick joke for the millions of Australians struggling to afford food and groceries,” Greens senator Nick McKim said.

“They are price gouging as food prices continue to drive Australia’s stubbornly high inflation numbers.”

But Dr Macau said his study pointed to the need for a more nuanced approach.

“Implementing radical solutions, such as compelling supermarkets to disinvest, might have counterproductive effects, potentially increasing prices due to rising costs,” he said.

A man in a suit smiles, with his arms crossed

Associate Professor Flavio Macau says there is no magical fix for bringing down prices at the checkout. (Supplied: Edith Cowan University)

He said despite the perception that supermarket profits were substantial, they were modest when examined through the context of costs and revenue.

Dr Macau compared the supermarkets’ earnings before interest and taxes divided by sales for 2024.

He found Coles to be 4.8 per cent, Woolworths 4.7 per cent, Pak’n’Save was 2.6 per cent, Countdown 1.3 per cent and Tescos 7.1 per cent after a difficult year the previous year.

A man in a plaid shirt wearing glasses

Dr Alex Wang was part of the team who evaluated the price of groceries across the four countries. (Supplied: Edith Cowan University)

Dr Macau said ACCC investigations into allegations of consumer deception by Coles and Woolworths highlight that accountability was key.

“However, vilifying them is not a fix for the cost-of-living crisis,” he said.

“A strategy that empowers consumers with smart shopping practices and encourages strategic purchasing could offer a more immediate and effective solution.”

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