Butchers battle as supermarket meat war rages on

INDEPENDENT butchers are banking on the service and greater range they offer to keep their heads above water as the supermarkets go head to head on red meat discounting.

They’re also counting on rural communities, and beef producers, seeing value in retaining competition in the retail meat game.

Supermarkets are now offering big sellers like mince, rump and legs of lamb for less than what butchers can buy it in for.

Australian Meat Industry Council state retail representatives estimate within six months at least five percent of the country’s butchers will close their doors as a direct result.

South Australian representative Trevor Hill, Adelaide, said the double whammy of supermarket discounting and fast-rising wholesale prices, courtesy of tight cattle supply, was squeezing butcher margins hard.

“Wholesale prices have consistently been going up 10 to 20 cents a kilogram every fortnight,” he said.

“We were paying a carcase price of 440c/kg on the bone 12 months ago and are now paying 740,” he said.

“At the same time, supermarkets have dropped their mince price to $6.99/kg – we can’t buy trim for less than $8.

“Supermarkets are selling rump at $9.99/kg, where we are paying a wholesale price in the vicinity of 15/kg.
“Supermarkets don’t need to make money off meat, they make it off the basket. What Coles and Woolies don’t say is that they mark baked beans or something else up to make up for that low mince price.”

NSW representative Robert Constable, Singleton, said in the long run, it would be consumers and beef producers who would lose out.

“Without the small fella going to yards buying butcher’s calves, and buying straight from the farm, all you have is three major chains and they are showing us right now what power they have,” he said.

“Once they don’t have us independent butchers to contend with, what they’re selling that beef for now is what they’ll give the farmer – exactly the same as what happened with milk.

“There might be room for the high street niche market butcher but all that competition will be lost.

“In 2005 we had 32pc of market share and that has just dropped below 20pc.”

Meat and Livestock Australia reports June quarter retail beef prices were steady on the January to March period.

At $19.16/kg retail weight, they appear to have plateaued after ten consecutive quarters of upward movement.

Butchers say they hit a mark where consumer pushback kicked in.

There was limited opportunity to recoup higher wholesale costs as a result, they say.

“Keep in mind retail beef prices have already risen 25pc in the past 12 months,” Mr Hill said.

“Butchers are reluctant to increase prices any further because we realise our customers have a budget as well and the next purchase they make may well be in the supermarket.”

Instead, they are tackling the supermarket discounting with better service, a greater range and higher quality cuts of meat.

“We can tell the story behind where the product has come from, how to cook it and we know our customers as individuals so can offer quick and easy, cost-effective meals suited to their particular needs,” Mr Hill said.

“We are also looking to our counter staff to really express gratitude to customers in a very genuine sense.

“There is something a consumer gets from knowing they’ve kept a little store in their town open, kept jobs going and kept diversity in the industry.”

Coles declined to comment and Woolworths was not able to provide a response before publication.

http://www.stockjournal.com.au/story/4098154/butchers-battle-as-supermarket-meat-war-rages-on/?cs=4874

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