Shopping at Aldi is shaving nearly $15 off Australians’ grocery bills when compared with the same items sold at Coles and Woolworths, where the difference in prices is just 75 cents, according to a new report by Choice.
The report, released by the consumer advocacy group on Thursday, comes as the supermarket giants face ongoing allegations of price gouging to record massive profits, and remain the subject of a number of inquiries.
Choice was commissioned to conduct the reports by the federal government, which gave the organisation $1.1 million in the federal budget to produce a report every three months for three years.
To conduct its research, Choice sent “undercover shoppers” to 81 supermarkets around the country in March to record prices of 14 different products and determine which chain offered the best value for money.
Choice found the average basket of groceries purchased at Aldi cost $51.51 — approximately 25 per cent less than the same basket of goods at Coles and Woolworths.
The items at Woolworths cost an average of $68.58, while Coles had the most expensive basket at $69.33 — meaning there was just 75 cents difference between the two major supermarket chains in Australia.
“Aldi is the best value when it comes to groceries across the nation,” Choice CEO Ashley de Silva told The Business.
“One of the things that we saw is that Aldi’s prices across the stores that we visited were reasonably consistent, you get a bit more variation in Coles and Woolworths.”
However, factoring in specials, the cost of items at Woolworths totalled $64.93, while the items at Coles cost $68.52. Choice noted that there were no specials on offer at Aldi at the time of shopping.
Mr de Silva said Choice determined its supermarket basket of goods after consulting its supermarket experts, who selected grocery items that are purchased frequently by Australians regardless of where they live.
Not all baskets are created equal
The Choice report highlighted that Australians are paying different prices depending on where they live, and people in areas without Aldi stores were often slugged with higher prices at the check-out.
“For people who aren’t near an Aldi, and there’s still quite a few of those, it does really matter where you live when it comes to what you pay for groceries at the supermarket,” Mr de Silva said.
“For example, places like Tasmania and the NT don’t have Aldi stores, so people there by default are going to be paying higher prices. But even in states like WA where Aldi is present, people there on average pay about $1 more for the same basket of goods.
“It differs too between city and regional areas, so metro folks are paying about 70 cents more for that same basket of goods.”
In lieu of Aldi’s presence in the Northern Territory and Tasmania, Choice compared grocery prices for 10 items sold at four IGA locations, finding that the items were more expensive compared to Coles and Woolworths. Further analysis on IGA’s prices was not conducted in other jurisdictions.
According to Choice, Coles and Woolworths combined make up 65 per cent of Australia’s supermarket sector. Aldi contributes 10 per cent to the sector, while IGA accounts for 7 per cent.
In a statement, Aldi said the data from Choice clearly showed its commitment to being “Australia’s most affordable supermarket” that provided “high-quality groceries at the lowest possible price”.
Representatives for Coles and Woolworths both noted that current prices were available on their respective websites, apps and catalogues, and were committed to delivering competitive prices for their customers.
“We welcome Choice’s contribution, however, it is unclear whether like-for-like products are being compared,” a Coles spokesperson said.
The ABC contacted Metcash — the parent company of IGA — for comment, but did not receive a response before publication.
Choice said its report compared prices between national brands and comparable supermarket brand or budget brand options.
However, the report noted that “some national brand products will be available at Aldi” — specifically Weet-bix and Lipton tea — and used “comparable products” or other items, such as home brand flour.
“We weren’t looking for just the cheapest price, we were really making sure that the products were comparable across what different supermarket chains offered,” Mr de Silva said.
“We get into quite a lot of detail around making sure that the sizes are similar, but also even down to the nutrition information to represent quality, so that we really felt like we were comparing fairly.”
‘Not a duopoly, but a monopoly’
Greens Senator Nick McKim, who recently chaired a Senate inquiry examining the country’s supermarket prices, said the findings from Choice were proof that price gouging was taking place.
“Extraordinarily, there is only around a 1 per cent difference in price on a basket of staple food items between Coles and Woolworths, and that shows that a choice between Coles and Woolworths is basically no choice at all,” he told The Business.
Senator McKim, who publicly grilled the supermarket bosses as part of the Senate’s supermarket inquiry, said the data from Choice was at odds with the evidence the committee heard in April.
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“The CEOs of Coles and Woolworths were really clear in the evidence they gave to the Greens-led supermarket inquiry, that they cross-check their prices with the person they described as their major competition as a regular basis,” he said.
“Ultimately, what the Choice data and prices show is that because of that cross-check, there is effectively not a duopoly, but a monopoly in the supermarket sector in Australia.
“It really doesn’t matter whether you shop at Coles or Woolworths, you’re going to pay almost identical prices for your food.”
The Tasmanian senator said it was disappointing that residents in his home state and in the Northern Territory were being charged more for groceries due to Aldi’s absence.
“It was really disappointing that Aldi said they weren’t considering expanding into Tasmania and some other parts around the country because it would give Tasmanians the opportunity to get cheaper food and grocery prices,” Senator McKim said.
“But this report is not going to tell Australian shoppers much that they don’t already know, and that is Coles and Woolworths are price gouging them, that there is not enough competition in the supermarket sector, and that we need to make price gouging illegal in Australia.”
‘Supermarket Olympics’ benefits shoppers
Assistant Minister for Competition Andrew Leigh said not only would households benefit from Choice’s supermarket price comparison reports, but it would also place greater scrutiny on the supermarket giants themselves.
“Our supermarket sector is among the most concentrated in the world, and so it’s only fair that we have appropriate scrutiny of prices,” he told The Business.
“Now, by funding it through the Commonwealth, we’ve got all that data out in the open, available to everyone.
“There’ll be a supermarket Olympics taking place every three months, judged by Choice, in the interest of Australian shoppers.”
Dr Leigh said the government was hoping that a recurring spotlight on supermarket prices through the publication of the Choice reports for the coming three years will benefit every household.
“This is setting up a healthy competition between our supermarkets, providing high-level price scrutiny, allowing shoppers to know where they can get a better deal,” he said.
“So if there’s a race to deliver the best prices for consumers, then Australian shoppers will be the winners.”
The Choice reports were part of the government’s focus on monitoring the country’s supermarket sector, Dr Leigh said, specifically referencing the review into the food and grocery code of conduct by former Labor minister Dr Craig Emerson, which is due to be finalised by the end of June.
The Australian Competition and Consumer Commission (ACCC) is also conducting its own inquiry into supermarket prices, with its interim report due to be handed to the government by the end of August.
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