Shoppers skipping on healthy groceries as living costs rise, says Coles

'Why should Australia pay more for big-brand items?', asks the supermarket chain's MD.

Australians are swapping healthy food for less expensive alternatives in an effort to cope with rising cost-of-living expenses, says supermarket giant Coles.

Meanwhile shoppers in Australia are having to pay more for big-brand items that are being sold for less in overseas markets.

The statements were made by John Durkan, the managing director of Coles Australia, in his address to attendees at the American Chamber of Commerce luncheon held in Sydney.

"At a time when incomes are not growing much, many households are having to confront large price rises in other areas of everyday living," he says. 

"This is placing significant pressure on household budgets and... is contributing to cautious consumer spending."

Durkan presented research – commissioned by Coles and conducted by Nera Economic Consulting – that found 40% of customers could only afford to spend $150 a week on a family of four.

Rising pressures of electricity and gas prices

Increasing living expenses and lower wage growth were squeezing household budgets, pressuring families from low socio-economic areas to spend less on healthy foods, according to the research.

"We should be concerned that many households feeling cost of living pressures are spending less on fresh produce and fresh meat... These households are being forced to trade off healthier options for their families," he says.

Durkan acknowledged the additional strain placed on households with electricity prices rising by as much as 20% and gas prices by up to 10%.

Coles, Woolworths or Aldi: which supermarket has the cheapest groceries? Read our 2017 supermarket price survey to find out.

The sentiments are consistent with a CHOICE survey that found more than 80% of Australians are concerned about household electricity prices and the cost of private health insurance.

Brand name products sold at premium

The managing director of Coles again called out big-brand suppliers – including Heinz, Mars and Coca-Cola – for selling their products at a premium in Australia when compared to the pricing they charge overseas.

"There are still challenges with some suppliers – mostly multinational companies – who seem happy to charge Australians more for their products than is the case in overseas grocery markets.

"This is really frustrating to me because often the price differences relate to the same product made and sourced in the same place. Why should Australian customers pay more for products like baked beans, coffee and razor blades, chocolate bars, than customers overseas?"

Durkan says he will keep the pressure on multinational suppliers so that they "do the right thing by Australian consumers".

He similarly called out big brand suppliers last month, describing their pricing in Australia as crazy, after a CHOICE supermarket investigation found the price of an average grocery basket was routinely more expensive at Coles.