A marketing perspective on the ‘fresh bread’ bunfight between ACCC and Coles.

Original article published by Tony Cordato. Full length article including legal arguments and marketing analysis available on Lexology.

Extract:

Marketing Commentary provided by Michael Field, Managing Director of Michael Field Strategic Marketing Consultants

The ACCC has commenced proceedings against Coles as it deemed the words ‘baked fresh’ were misleading and unfair to smaller bakery businesses. However it is likely that Coles had Woolworths clearly in its sights, rather than the smaller bakeries.

The grocery business in Australia is a $111 billion business (according to KPMG’s State of the Industry 2013’ report) with the top two retailers Coles and Woolworths collectively holding ~80% share of the total grocery market. This compares to 48% in the UK, 44% in France and only 24% combined market share of the top two grocery retailers in the USA.

In the grocery wars, there are only two viable positions to own in the consumer’s mind:

  1. ‘Fresh’ which is the centrepiece of Woolworths brand positioning with taglines such as ‘Australia’s Fresh Food People’
  2. ‘Value’ or ‘Price’ which has dominated Coles marketing efforts for decades with their ‘Everyday Low Prices’‘Save Every Day’ and more recently ‘Down, down. Prices are down’ taglines

To lay claim to ‘fresh’ through their bakery range is a clever marketing strategy by Coles as it dilutes the Woolworths position as ‘Australia’s Fresh Food People’ and helps Coles release themselves from the unwinnable market position of ‘price’ with new kids on the block Aldi and Costco fast becoming serious competitive threats on price.

By including par-baked products in their claim to ‘freshness’ Coles may not have picked the right execution legally, but the strategy of targeting ‘fresh’ has merit.

It is hard to determine how much damage this decision has done to the Coles brand, but it is unlikely to be very serious or long term. With ~80% market share between them, we can expect to see more tiffs in the aisles with the two giants fiercely fighting it out for their slice of the pie.

That being said, it is hard to imagine the ACCC will stop at ‘fresh’ bread. Much of the so-called ‘fresh’ food in supermarkets isn’t as fresh as the advertising would have you believe. ‘Fresh’ meat could have been butchered months ago, and those shiny red apples might have been in storage for more than a year.

So are meat, fruit and vegetables that have been stored for an extended period still truly ‘fresh’ ? According to the Australian Competition and Consumer Commission’s Food Descriptors Guideline (2006): ‘fresh’ refers to food put on sale as early as possible and as close to the state it would be in at the time of picking, catching or producing; the term ‘fresh’ generally implies that food has not been frozen or preserved; and as some foods stay fresh longer than others, it is not appropriate to give specific guidance on all foods.

Emboldened by their win, expect to see ‘fresh’ fruit and vegetables, juice, meat and flowers under scrutiny for their ‘fresh’ claims. What implications are there for Woolworths with the longstanding brand position and tagline as ‘Australia’s Fresh Food People’ ? What are the implications for every business that advertises fresh bread, fresh fruit, fresh juice or fresh produce?

We may not have long to wait before the ACCC aims at a fresh target!

For the full article, click here.

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