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A leading executive at Coles says Australian supermarkets could have checkout-free shopping in 10 years as innovation in retail technology and an increasing focus on costs quickly make the traditional purchasing experience redundant.

"I'm not concerned with the competition at all, I actually find it quite healthy," he said.

"It keeps us on our toes."

Clarification 13/1: In a statement circulated to media on Monday following the publication of this story, a Coles spokesperson confirmed the supermarket was trialling checkout-free shopping technology but said the retailer has "no plans" to completely phase out belted checkouts.

"We've seen technology transform the shopping experience over the past 10 years to make it more convenient and tailored to individual needs," the statement reads. "Coles first introduced self-serve checkouts 16 years ago, and around half of all sales are still made by Coles team members scanning customers’ groceries at belted checkouts."

"We have trialled a number of new technologies to help our customers complete their shopping faster, however there are no plans to phase out the belted checkouts which remain a key part of our store offer."

Shares of Treasury are down 3.7 per cent this year, after falling 7.3 per cent in 2018. The stock was down almost 5 per cent on Thursday to $14.24 and halted from trading until the market close.

Costa Group, run by CEO Harry Debney, issued a profit forecast downgrade on Thursday. Wayne Taylor

Vertium Asset Management chief investment officer Jason Teh said investors were bailing out.

"Prior to today it was trading on a very rich price-earnings ratio. Now we have flat earnings and everyone is racing out the door," Mr Teh said.

Overseas ventures to revive growth

Despite weak avocado sales hurting Costa's bottom line, Avocados Australia CEO John Tyas said domestic demand for the fruit had increased 6.3 per cent per annum since 2005-06 to 2017-18.

Mr Tyas said a rapid increase in Australian avocado production meant the Australian market is approaching saturation. He said it is "imperative for the industry to access and develop new markets" as a result.

Mr Debney said the company's overseas operations would help to revive growth. He said expanded Chinese production of blueberries, raspberries and blackberries, along with blueberries in Morocco, combined with South Australian mushroom production picking up, would drive future sales growth.

Over the 2019 calendar year growth would be in line with previous guidance, he said.

Investors who joined the company at the initial public offering in 2015 have experienced good growth in the stock until a more volatile period over the past 12 months. The share price when the company listed in July 2015 was $2.25 and the stock reached an all time high of $8.98 in June 2018.

A hedge fund manager who is short Costa and declined to be named said this downgrade was foreshadowed.

"The structure of Costa's relationship with its major landlord VitalHarvest, who earns most of its income from a revenue-sharing agreement with its tenant, and the Costa family's decision to sell out of their exposure to this entity via the VitalHarvest IPO last year, foreshadowed what insiders thought about the true prospects for the 2019 year," the hedge fund manager said,

Costa's poor sales performance was exacerbated by delays in a planned upgrade of its Monarto mushroom facility, the citrus off season finishing earlier than expected and ongoing costs from new investments, the company told shareholders.

Surprising downgrade

Macquarie analysts said in a note the downgrade was a "fairly significant change" in a short period, given a statement from Costa at its annual general meeting in November 2018 that said it was "off to a solid start to year".

The analysts, led by John Purtell, said the downgrade was especially surprising at this stage in the financial year because the typically bigger June half of the year was still to come.

Late on Thursday, JPMorgan cut their price target for Costa from $7 to $4.74 and downgraded the stock from overweight to neutral.

The analysts said "although the company believes these issues are not structural, oversupply in a number of Costa's core categories has always been a risk, and is now firmly in focus".

Costa has had an intense investment schedule over the last 19 months, said a note from Credit Suisse released in December 2018. The company acquired a large presence in avocado production, increased control of its Moroccan berry operation African Blue to 89 per cent, continued to expand its mushroom capacity, furthered berry expansion in China and increased its hectares of citrus production by 25 per cent.

Credit Suisse highlighted the main risk facing Costa was "output price and volume fluctuations due to short-term supply demand dynamics". 

According to Macquarie, Costa's downgrade was the second miss to guidance in the last six months, after poor weather in Morocco impacted its blueberry production there in August 2018.

Costa will provide a guidance update at its results release in late February.

Appliance maker LG Electronics (LG) took home the 2019 CES Innovation Award for its capsule-based craft beer making machine.

LG HomeBrew, which debuted at the Consumer Electronics Show in Las Vegas this week, allows consumers to create craft beer with single-use capsules containing malt, yeast, hop oil and flavouring. The system features an optimised fermentation algorithm as well as a self-cleaning feature.

The new beer brewing machine can create five different beers including hoppy American IPA, golden American Pale Ale, full-bodied English Stout, zesty Belgian-style Witbier and dry Czech Pilsner. It can produce up to five litres of beer in approximately two weeks depending on the beer type.

“LG HomeBrew is the culmination of years of home appliance and water purification technologies that we have developed over the decades,” said Song Dae-hyun, president of LG Electronics Home Appliance & Air Solution Company.

“Homebrewing has grown at an explosive pace but there are still many beer lovers who haven’t taken the jump because of the barrier to entry and these are the consumers we think will be attracted to LG HomeBrew.”

The LG HomeBrew process includes fermentation, carbonation and ageing before serving up and cleaning. Consumers can check the appliances’ status anytime and anywhere by using an app available on Android and iOS.

The optimised fermentation algorithm controls the fermenting process with precise temperature and pressure control to create the brew. It automatically sanitizes using just hot water, ensuring everything is hygienically clean for the next batch.

Supermarket giant Coles has added a new quarterly publication with information and tips for customers on health and wellbeing.

The free magazine which is available in-store and online, has been created in collaboration with content marketing agency Medium Rare.

The new magazine offers expert-led information and tips on how to find the best products and solutions in-store.

“Our new magazine has been created to help Australians navigate the health and beauty aisles through reliable and credible information,” Coles marketing content manager Maia Bryant said.

“We have challenged ourselves to help people live better and healthier lives and we want to show customers how to save money through smarter choices at the checkout. We’re thrilled that leading health and beauty brands have been excited to get on board this new publication.”

Magazine editor, Medium Rare’s Michelle Bateman, said it provides realistic, holistic and achievable health and beauty solutions.

“Coles Health & Beauty offers readers credible advice, practical tips, helpful how-tos, and an edit of the best buys in the supermarket, from bargain products to hidden gems,” Bateman said.

“We’re excited to provide Coles customers with content that delivers real value and advertisers with a highly engaged audience.”

Medium Rare also produces the monthly Coles magazine – Australia’s most read publication, with 4.6 million readers nationally.

Granted, the restaurant is doing brisk business thanks to Uber and other food-delivery platforms that have exposed the business to a larger market.

But how long before Australia has a duopoly of food ordering and delivery companies and they exploit their market power to lift prices?

How long before small food businesses have to give more than 40 per cent of each sale to food giants and are beholden to them? And customers ultimately pay the higher fees?

It’s a scary thought. Food logistics is all about scale: having one or two large transporters is more efficient than a market with smaller players. We’re hurtling towards that now: Uber, followed by Menulog and Deliveroo.

Australia’s “Noah’s Ark” economy is rife with industries with a few giants and not much else. Think supermarkets, energy retailing, domestic airlines, property advertising and banks. And think how some of these industries misuse their power.

Thankfully, supermarket duopolies are breaking down as Aldi and other entrants boost competition. But in food ordering and transportation, industry concentration is increasing as the market takes shape.

The big food platforms are not just tech companies. To my thinking, they are fast becoming a utility where one or two firms eventually own home-delivery food distribution channels and where barriers to entry (for a rival utility) are extraordinarily high. And where many small restaurants live or die based on their access to this platform.

I suspect the restaurant I mentioned would not survive without Uber and other platforms, or lose market share to rivals that use them. If a food giant lifted their fee from each order, the restaurant would have to wear it. That’s market power in action.

In fairness, Uber and its rivals have used technology to disrupt a market, discovered a great business model and a large market. They provide a useful service for time-poor consumers who gladly pay a bit extra to have food home-delivered and like the extra choice. They help restaurants that cannot afford in-house couriers.

Still, the concern is that regulators and policy makers have not thought enough about the food-ordering boom and its economic, societal and environmental implications.

Consider what’s ahead. Investment bank USBS in 2018 estimated USB in 2018 estimated the global food-delivery sales market will grow from about $US35 billion to $US365 billion by 2030. If UBS is right, there will be a tenfold increase in the value of home-delivered food in a little over a decade.

UBS hypothesised that most meals currently cooked at home will instead be ordered online and delivered from restaurants or centralised, industrial kitchens by 2030. Imagine if millions of Australians had their meals delivered.

It will never happen, right? Certainly, older generations who grew up cooking their meals are not about to hand that over to cafes and Uber or Menulog.

Nor are those who enjoy cooking or cannot afford restaurant-cooked meals. But younger generations who are time-poor and asset-light, and who have grown up with technology, might view home cooking differently.

As populations and city densification increases, apartments will become smaller. Perhaps each will have a tiny kitchen (that’s happening now), no kitchen or a shared kitchen for residents, for the few times they cook meals. Perhaps cooking will become like sewing for emerging generations; a basic or forgotten skill with more complex tasks outsourced.

I wonder what the food-ordering boom will do to social connections. Families cooking a meal and eating together at the table builds relationships. It’s far healthier than people ordering food online and eating it from containers in front of a screen.

Perhaps cooking will become like sewing for emerging generations; a basic or forgotten skill.

Then there’s the environmental risk. What happens when millions of Australians eat one or several meals each day from a single-use plastic container, delivered in a paper bag? And what is the carbon footprint of an army of food couriers in old cars and motorbikes? What will our streets and parking look like when thousands of food couriers dominate them?

If you are frustrated by food couriers and their driving standards now (and my pet hate: couriers wearing helmets in restaurants), wait until there is a tenfold increase in a decade or so.

And will we have a larger underclass of poorly paid food couriers who live on the Gig Economy’s scraps and have no power in the food network?

Governments here and overseas are right to ensure fair wages and conditions for food couriers.

Arguably, that is an easier issue to fix. A bigger challenge will be regulating a food network that will transform aspects of Australian life – and is years ahead of regulators.

Marley Spoon CEO Fabian Siegel was all smiles at the ASX listing last July but things have soured for the home-meal-kits company.  Peter Braig

Marley Spoon, a Germany company that operates in Europe, the United States and Australia, believes some of the biggest upside will come from Australia. The company raised $70 million in fresh capital before listing on the ASX in July at $1.42. The Marley Spoon instruments that trade on the ASX are called Chess Depositary Interests, which have the same characteristics as shares but are used by international companies wanting to trade on the Australian exchange. The Marley Spoon CDIs had sunk to aslow as 39.5¢ on December 17. Yesterday they were listed at 40¢.

One of the doubters in the lead-up to the float was Dean Fergie, portfolio manager with Cyan Investment Management. He steered clear of investing in Marley Spoon. Six months on and those initial misgivings have been reinforced.

Marley Spoon has had a rough six months since joining the ASX ranks. Supplied

One of the co-founders, Fabian Siegel, has kept the faith. He bought an extra 192,000 CDIs on November 20 and 21 at prices between 51¢ and 52.3¢ and through various investment vehicles has 20.6 per cent of the company.

Siegel signalled in early June when the prospectus was unveiled that high profit margins of supermarket giants Woolworths and Coles had enabled Marley Spoon to find a niche in Australia. But then a war of words broke out in November when the chief executive of Coles, Steven Cain, said his company viewed pre-prepared meals as a big growth opportunity.

In mid-November, Siegel warned Coles and Woolworths off the $300 million meal-kit market, saying selling meal kits on supermarket shelves or online was not viable for the major chains.

He said at the time that "consumers who have discovered meal kits … don't stop going to the supermarkets but they are shifting a big chunk of sales away from the supermarkets to services like ours".

On his side, Siegel also has the global trend for people to focus more on health and wellbeing, and a touch of the "war on waste". The exact quantity of ingredients needed are delivered in a smartly packaged box with recipes. There is no waste; in Marley Spoon's world, the days are gone of a shrivelled broccoli sitting in a fridge for too long after being bought from a big supermarket and not used.

The business was founded in 2014 in Berlin and expanded to Australia the following April. But it stumbled in Britain, launching there in late 2014 and shutting down in 2016, unable to make the economics work in the crowded British market.

The Millennials, the label given by demographers and popular culture experts to those born between about 1981 and 1996, are causing big shifts around the world, a change sharemarket investors are trying to factor into their thinking. At a Sohn Investment Conference in New York in April, two hedge funds predicted that online food-ordering companies would benefit as the Millennials' influence expands, with growth in restaurant sales outstripping supermarket sales.

Coca-Cola has completed the acquisition of Costa Limited from Whitbread PLC, which was first announced on August 31 last year,

The US$4.9 billion transaction follows approval from regulatory authorities in the European Union and China.

Costa has operations in more than 30 countries, giving Coca-Cola a significant footprint in the global coffee business. The existing Costa Express vending system also provides opportunities to introduce ready-to-drink products.

“We see great opportunities for value creation through the combination of Costa’s capabilities and Coca-Cola’s marketing expertise and global reach,” said James Quincey, CEO of The Coca-Cola Company.

“Our vision is to use the strong Costa platform to expand our portfolio in the growing coffee category.”

Alison Brittain, Whitbread Chief Executive wished “friends and colleagues at Costa all the very best for their future success.”

“Whitbread acquired Costa 23 years ago, when it had only 39 shops. Costa has grown to become a leading, international coffee brand, and Coca-Cola is the right partner to take Costa to the next stage of expansion,” Brittain added.

Costco Wholesale Australia managing director Patrick Noone holding a bottle of single malt scotch whisky for sale at $13,999.99  Supplied

Managing director Patrick Noone said he had plans to start building in Perth in the next few months and was always on the hunt for new sites in capital cities.

"We just grow as we have opportunity," he told The Australian Financial Review. "We don't have any [warehouse] numbers out there."

Costco sells everything from fresh meat and seafood, to bulk packs of toilet paper, office supplies, cashmere sweaters and surfboards.

"We have been doing higher volumes in the warehouses we have," he said. "We leverage our costs through growth of sales. We keep driving that top line."

There were some added gains from mark to market on foreign exchange as well, he said.

In early December Costco's parent said net sales for the first quarter of 2019 reached $US34.3 billion, up 10.3 per cent from $US31.1 billion during the first quarter the prior year. Same-store sales were up 8.8 per cent, while international comparable store sales (which includes Australia) were up 4 per cent.

Costco Australia had not made consumers an online offer yet, but had plans to do so in the next 12 months, Mr Noone said.

However, it will not be easy competing with the likes of US e-commerce giant Amazon for its slice of the $100 billion food and grocery market.

Asked about the demerger of Coles from Wesfarmers and new entrant of Kaufland, Mr Noone welcomed the competition.

"Our focus is to continue to drive the top line, and leverage our cost base and as long we we keep doing this people will return to Costco," he said.

"The more competition there is the better for the consumer, and it certainly makes us work harder. If we keep costs low and drive sales, we are in great shape."

In November, Coles managing director Steven Cain said it planned to keep a lid on food prices, saying the retailer would grant supplier requests for price rises only when they were justified by rising costs.

After playing hard ball with suppliers for 10 years, Coles and Woolworths are under increasing pressure from suppliers to approve price rises as the drought pushes up the price of commodities including wheat and milk, compounding pressure from rising utility costs.

Price cuts had reduced the cost of the weekly grocery shop for consumers and limited the impact of discounters such as Aldi and Costco.

However, Mr Noone said 2019 would be another competitive year.

"There is upward pressure on agriculture, with increased cost of grains and feed, and utility prices," he said. "In the short term I don't see that changing."

But with the supermarkets getting in on the act in 2018, veganism has now hit the British mainstream. It was the year veganism no longer meant annoying trips to a pricey health food store three suburbs away. And the year that being a vegan no longer meant being a social pariah, impossible to cook for; your dinner party host or long-suffering partner could now just grab a convincing and tasty ready-meal from the supermarket round the corner. In fact, the new route to social pariah-dom is to diss vegans: just ask the editor of the Waitrose Food magazine, who was forced out in October after his disparaging remarks on vegans went public.

British trends migrate to Australia pretty quickly. So if you've ever flirted with cutting down on meat, dairy and eggs, 2019 might well be your moment. And if you're in the food business, or want to be, this is a growth area to watch.

Vegan milk alternatives. From left hazelnuts, almonds, oats and coconut. Supplied

"I lost weight, my hair got shinier. I felt so much better," she tells me over a meal at a vegan café in west London. The biggest challenge was her family: they were at a loss to how to cater for her, and she even skipped family Christmas the first year to save her mum the trouble.

But now the world has changed around her. "You used to have to do everything yourself. I used to say to people that it's easy to be vegan if you like to cook. But that's not true any more – if you want something like a vegan pizza, you can get it in the supermarket."

She recently had a baby and plans to bring him up vegan, although she admits this will take even more research and effort than going vegan herself.

Experts generally accept that a vegan diet can be adequate, even for children. But although worries about calcium and protein are overblown, you do have to spend more time thinking about how to get vitamin B12 and omega-3 fatty acids in particular.

Vegan leather products, like this bag from The Edge, are also increasingly popular. Anthony Weate

You also need to be wary of assuming that just because something is vegan, it'll be healthy. Lots of those new ready-meals on the supermarket shelves are pretty heavy in salt and fats, and should be approached with the same care as their meat equivalents.

And you need to get used to the idea that things won't taste exactly the same as the meat equivalents you are used to.

"You can't just add a bit of goat's curd to your salad. You need to find different ways to create flavour with vegan food. That's still the specialist thing," Hollweg says. Harris agrees: "Trying to get a mac-n-cheese to taste cheesy – that's the holy grail."

That's where the business angle comes in. With the supermarkets buying in, the vegan food industry is on the up. Not only is production increasing, but so is R&D.

Blockbuster technology

Niko Koffeman, co-founder of Dutch company The Vegetarian Butcher, wants to make products that are indistinguishable from the real thing. A few years ago he successfully fooled El Bulli chef Ferran Adrià into thinking he was eating genuine chicken, and he has a best-selling sausage roll that carnivores in a blind tasting rated more highly than the meat version.

He says turnover is growing 50 per cent a year. A lot of the growth is in ready-meals and snack food, where the vegan market has previously been starved of product. The economies of scale he hopes to achieve will eventually mean his prices could undercut the real thing. He foreshadows imminent expansion into Australia.

Kevin Brennan, British CEO of industry stalwart Quorn – found in the frozen food aisles of Australian supermarkets, says his company has stepped up its research into technology that can replace eggs as a binding agent (in case you're interested in what's under the bonnet, the big hope lies with isolates of mung bean, fava bean and chickpea).

"Everything we launch as vegan sells well," he says. "We launched a vegetarian fish finger that failed, but the vegan one was successful. The vegan label is almost replicating gluten-free as a badge of a clean and healthy product – it's like a form of shorthand."

Sales of vegetarian/vegan food are growing at 20 per cent in Britain, he says, the fastest growing food category of any scale. "Retailers are seeing that it has worked. A lot of categories are not growing, so I expect we'll see space open up and open up," he says.

But he warns that not all the new entrants racing into this space are likely to succeed – in his sector, the success rate for a new product can be as low as one in 100.

"The barriers to entry are low, but the barriers to making a good product are quite high," he says. "It's noisy rather than intensely competitive. There's not yet any blockbuster new technology or formats."

But scientists in western Europe and the US west coast are leading the charge to prove Brennan wrong. Intriguingly, some of the vanguard are getting funding from the corporate carnivores. The San Francisco company JUST, which produces a vegan egg substitute, has teamed up with Italian egg giant Eurovo. Tyson Foods, an American meat producer with a turnover of $US38 billion last year, has pumped money into vegan brand Beyond Meat.

All this seems to bode another bumper year for veganism, and for vegans. Harris is pleased that the trend is moving beyond "hipsters and hippies", but she warns it's not all plain sailing: many people, on discovering she's vegan, still expect her to be a "preachy pain in the arse". It might take more than a well-provisioned supermarket aisle to change that.