Supermarket giant Coles was banned for three years from advertising that its bread was made or baked on the day it was sold and will have to hang signs in stores admitting that it passed off par-baked bread as freshly baked.
Coles, which faces penalties of up to $3 million, was ordered by the Federal Court this week to display the signs.
The move comes as the three biggest supermarkets, Woolworths, Coles and Aldi, roll out 85 cent private label white bread and push bread prices down at the discount end.
While around half of all bread is sold by small bakeries and chains such as Baker’s Delight, Brumby’s, and fast-growing artisan bakeries such as Sydney’s Sonoma, some small regional bakeries have felt the impact of the Woolworths Homebrand bread price cuts.
And increased private label bread discounting by the supermarket majors also puts increasing pressure on major bread suppliers George Weston and Goodman Fielder to remain viable in bread manufacturing.
Woolworths claimed in 2013 that private label was 10% of total sales and 18% of packaged grocery, while IBISWorld estimated that private label sales make up 25% of all Australian supermarket sales. Aldi is about 95% private label.
Private label bread accounts for around 14% of packaged loaf sales, while private label milk has claimed 52% of supermarket milk volumes.
An IBISWorld report said that by 2019-20, it’s unlikely that any food brand will be safe from private label competition.
Australian Competition and Consumer Commission chairman Rod Sims doesn’t see this latest discount bread war as predatory pricing. He said that the watchdog was cracking down on “credence” claims generally and not just targeting supermarkets.