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The move by nation’s supermarkets to lock in prices on everyday grocery items may be short-lived, with Woolworths and Coles yet to commit to extending their policies beyond the next few months.

Both Coles and Woolworths have moved to reduce and lock in prices on a range of common items this year, in a bid to give shoppers greater certainty over their bills at a time of product shortages and rising cost of living pressure.

Woolworths has launched a price drop program on common grocery items, which is set to end in November, as well as a policy to freeze the price of 200 essentials until the end of the calendar year. Meanwhile, Coles this week decreased the price of 150 items and locked these until the end of January 2023.

With the Reserve Bank’s decision on Tuesday to raise interest rates by 25 basis points to nine-year highs to exert further strain on household budgets, lower income households in particular would need to tighten their belts. Both major supermarkets have acknowledged that their customers are facing a cost of living crunch, and said they are keen to offer deals for budget conscious shoppers.

However, neither would confirm on Tuesday whether these policies will be extended beyond the end of this year.

“Like any of our promotions or value offers, we will continue to work with our supplier partners on whether these offers can be extended, as well as the potential to bring in other new and exciting offers,” a Coles spokesperson said.

Woolworths would not comment on future pricing decisions, but a spokesperson for the supermarket said the business was working on a range of offers to help its customers.

“Customers can also stretch their budget without sacrificing top quality by opting for our Woolworths brand products, which are available across a range of categories at competitive prices,” they said.

Retail analysts are tipping conditions will deteriorate for businesses, which sell their produce to the big supermarkets, as they tackle rising cost pressures and tightening margins. Pressure from these suppliers, could spell an end to product promotions and force the hand of big supermarkets on pushing through price increases.

A survey of 56 consumer goods makers by investment bank Jarden, carried out last month, revealed close to three quarters of the suppliers surveyed wanted to raise prices in 2022.

“This would suggest inflation will continue to accelerate in the coming months,” analyst Ben Gilbert wrote in a note to clients.

Retail expert and QUT professor Gary Mortimer said the prevailing market conditions put the major supermarkets in a difficult spot, as they manage their bottomline while providing relief to their customers.

Delivery price consistency, according to Mortimer, was an important tool for supermarkets during inflationary times, especially as discounting becomes more difficult.

“Consumers are certainly attracted to a supermarket that can hold prices at a consistent level for a period of time, particularly if it’s those core products that people buy,” he said.

Coles’ shares closed the session 1.35 per cent stronger at $16.52, while Woolworths was 1.5 per cent higher to $33.99.

Aldi has opened its first Corner Store concept, in Melbourne’s CBD, complete with a cafe serving barista coffee.

The company says the store is designed for inner-city customers stocking ready-to-eat meals, fresh produce, bakery items such as cinnamon buns, croissants and baguettes, and its discounted Special Buys products. The Corner Store concept was first tested on Sydney’s North Shore, a hybrid model of part convenience store, part supermarket.

Huw Longman, director of Aldi Corner Stores, said the new shop will meet the needs of customers in the surrounding high-density, urban area.

“Shopping habits continue to evolve, and we are seeing a large audience of people who prefer shopping more frequently with a hyper-focus on convenience.”

He said the store meets these needs, taking convenience and creativity and combining it with quality and savings.

To commemorate the store opening, a unique limited-time Lazzio coffee cart pop-up will offer customers coffee for 37 cents. The coffee beans are hand-roasted in Victoria by Black Bag Roasters. Proceeds from the coffee sales will be donated to Aldi’s national charity partner, Camp Quality.

The new store is located at 501 Swanston St.

Sam Lentini has been watching perfectly good citrus drop from his trees and rot for the past two years.

A third generation farmer on the Central Coast, Lentini said labour shortages, exacerbated by the COVID-19 pandemic, had left him without enough workers to pick the oranges, lemons and limes for his juice company.

“It’s all done by hand, and due to the lack of staff a lot of our crops just fell on the ground with no one to pick them,” said Lentini, a director of the family owned Eastcoast Beverages.

“It’s very hard to get staff at the moment. People come in for interviews, we offer them the job, and they don’t show up the next day.”

The agriculture sector is desperate for workers – from fruit pickers and packers to abattoir and dairy workers. The pandemic has thrust the sector’s gaping deficit into the spotlight, but in reality, horticulture has struggled with labour issues for years and even industry leaders have conceded there have been problems with exploitation and wage theft.

Lentini’s company employs about 65 skilled and unskilled workers, each with a key role to play in getting the citrus from trees and into bottles. The advent of the COVID-19 pandemic, however, has led to a collapse in backpacker labour numbers; as a result, Eastcoast Beverages is still losing money two years afterwards.

“[We have had] a big financial loss. We lost a lot of crops because we couldn’t get them off the trees,” Lentini said.

“Picking the fruit is straightforward, but we [also] need truck drivers, forklift drivers, line operators, team leaders and managers.”

The agriculture, forestry and fishing industries employ about 439,000 people, according to Australian Bureau of Statistics figures for the year to June 2021.

Last week a group of industry bodies, the Food Supply Chain Alliance, reported more than 172,000 workers were needed across sectors from food production to transport and hospitality.

This figure includes 10,000 individual workers over a 12-month period in the horticulture sector, although demand increases during the summer harvest as well as 12,000 in meat processing and 10,000 in the seafood industry.

Migrant labour has typically come from backpackers and workers from the Pacific Islands who are here under a seasonal workers program, a scheme that tends to have much better labour standards. It is also estimated that there are tens of thousands of undocumented workers in Australia without a valid visa to work on farms.

Lentini said that the government needed to be more proactive in encouraging Australians into the agriculture industry, so that farms didn’t need to be so reliant on migrant labour.

“Nobody wants the work, and we have tried advertising in numerous places,” he said. “It affects the numbers of product on shelves. If we don’t have the full crew we can’t deliver our promises to all of our customers, and that’s a loss of income for us.”

A2 Milk has outlined a renewed focus on building back its pandemic-battered Chinese daigou community while announcing a share buyback of up to $NZ150 million ($133.6 million).

The milk and infant formula maker swung back to profit in the 2022 financial year, with revenue up 19.8 per cent to nearly $NZ1.5 billion and net profit after tax rose 42.3 per cent to $NZ114.7 million.

A2 Milk’s share price jumped nearly 10 per cent higher on the back of the latest numbers to close on $5.40.

While revenue from its overall Asia segment rose 24.5 per cent, its daigou channel revenue slid by 17 per cent in the 2022 financial year, following a 42 per cent slide in 2021. Daigous are shoppers who buy and export premium goods to customers in China for a profit.

But the New Zealand-headquartered company is now refocusing on regrowing the daigou channel, which chairman David Hearn previously said was “never going to be quite the channel it once was”, and has ramped up its marketing content and sales events in efforts to regain market share.

A2 Milk CEO David Bortolussi said the slowed rate of decline in the daigou channel was proof it was “turning a corner”, and he “absolutely” wanted the lucrative but pandemic-disrupted channel to bounce back to its heyday.

“The daigou channel, through one-to-one word of mouth recommendation, is a really powerful form of new user recruitment and communicating our brand messaging through the market more generally. So it’s a really important and effective channel we want to support,” Bortolussi said on Monday.

A2 Milk has strengthened relationships with Chinese daigou resellers by setting up its own WeChat channel to communicate directly about products, creating sales and brand launches and product innovations. The company’s Platinum infant formula has new packaging and a “slightly new” formulation.

The dual-listed company’s share buyback is slated to start at the end of September and run for 12 months across the ASX and NSX, the New Zealand bourse.

Bortolussi said the buyback came as a result of assessing its net cash balance of $NZ817 million and determining that it had more than enough of a buffer for investment and market volatility and was left with “excess capital”.

“[We have] about $NZ150 million in surplus to our needs at the moment and going forward, we reviewed alternative ways to return that capital to shareholders, and we decided that the most appropriate means at this point in time – and it could be different in the future – is to execute an on-market buyback ... which is a real sign of confidence in our outlook,” he said.

Revenue from its Australia and New Zealand markets slid by 4.8 per cent to $533 million as a “direct consequence” of a restructured sales strategy while US market revenue rose 30 per cent to $83 million.

A2 Milk, which has been pipped by smaller player Bubs Australia in supplying infant formula to the US and had its own application “deferred” by the US Food and Drug Administration (FDA), is still open to the market opportunity, but Bortolussi played down its significance. He said it would have been unlikely to have made a material difference to the company’s outlook.

“It’s a very big market and profitable, but it’s very concentrated and highly competitive ... when you look at others that have entered the category over there, they’ve really struggled to gain any significant share and develop a profitable sustainable business,” Bortolussi said.

The $NZ3.62 billion company stands by ready to support “mostly from a humanitarian basis” to ensure mothers and babies have access to infant formula.

“If we ever get that opportunity in the future, and there’s a commercial opportunity in the longer term, then we’d explore that. It’s not a big deal,” Bortolussi said.

“Even if we had have received FDA approval, I doubt whether that would have changed our outlook. It would be significant to our US business, but not to the a2 Milk company overall.”

The company will be forced to raise prices on its products amid significant increases in global dairy commodity prices, as well as cost pressure across the supply chain, including logistics, freight warehousing and employee costs.

Citi analysts, which have a neutral rating on A2 Milk, said the company’s net profits overshot expectations by 7 per cent, driven by “better-than-expected” performance in China.

Milklab manufacturer Noumi is pinning its hopes on the continued growth of its prized brand to turn around a balance sheet battered by an expensive dispute settlement, high dairy prices, Russia-triggered geopolitical instability, and COVID-19 disruption.

Noumi (formerly Freedom Foods), which also makes other beverage and milk-powder brands including Australia’s Own, Vital Strength and Uprotein, on Monday unveiled profit, revenue, and earnings that all slid backwards in the 2022 financial year.

The company suffered $161.1 million in net losses after tax, deepening from $38.6 million in 2021. Adjusted operating EBITDA and revenue tumbled by 68 per cent and 5 per cent respectively.

Noumi’s net losses were driven by its expensive settlement with a former supplier, US almond grower Blue Diamond, which took a $55.6 million bite, as well as a non-cash asset impairment of $95.7 million amid high input costs and rocketing farmgate milk prices, which have been passed on to consumers.

But the popularity of cult favourite Milklab drove a surge in plant-based beverage sales, one of the few bright spots in Noumi’s 2022 results.

Milklab sales rose 18.7 per cent to $49.8 million. More broadly, revenue from its plant-based beverage business was up 7.2 per cent to $164 million and adjusted operating EBITDA jumped 30.3 per cent to $33.4 million.

Noumi chief executive Michael Perich, who stepped into the top job after a spectacular corporate implosion in mid-2020, said he remained committed to the company.

“I’m absolutely excited about the potential within this business,” Perich said, pointing to Australia’s role as a “food bowl” to Asia.“There were some rocky periods that we’ve had to go through,” he said, but his positiveness around returning to “medium to long-term sustainable, profitable growth”, was unwavering.

Perich was eager to point to growth in the plant-based beverages business, but conceded the company was still in the midst of a “bumpy” transformation phase that began after the discovery of $590 million in accounting irregularities, which sent its market cap and share price plummeting.

“We had headwinds in this year that were unforseen around pricing, COVID staffing-related issues. We have really worked hard around mitigating a lot of those,” he said. “There [have] been a lot of external factors that are really unforseen that have driven some of those [impacts on the business].”

The company will focus on growing Milklab’s brand by expanding sales in the South-East Asian market, which accounts for 11 per cent of the company’s revenue. Australia and New Zealand account for most of Noumi’s revenue (70 per cent).

Despite strength from Milklab and Australia’s Own, investors were unimpressed by the company’s overall performance, sending Noumi’s share price down 12.8 per cent to 20.5¢ by the end of Monday’s trading session.

“We’re just focusing on continuing to do what we’re doing,” Perich said.

“We’re aiming at delivering profitability leading to long-term growth in the company; I assume the share price should follow that.”

Noumi shares, currently hovering around 21 cents, are worth less than 10 per cent of their September 2018 peak of $5.30.

Poultry retail franchisor Lenard’s has signed a distribution deal with wholesale warehouse Metcash to supply its chicken products to independent supermarkets nationwide.

“Metcash is such a big supporter of Lenard’s,” said Harry Rumpler, CEO of Lenard’s. “Supermarkets are particularly excited as we have not been available in most of these regions for several years.”

The company has traditionally sold its products through its own store network. The bold move has now seen stockists increase from nearly 100 to several hundred across Victoria, Queensland, and SA, with WA and NSW to follow soon.

With an estimated $16 billion in sales last year, Metcash distributes products to more than 1500 independent supermarkets nationwide, including IGA, Romeo’s Foodland, IGA Ritchies group, and Drake’s Queensland.

The partnership is the first major strategy implemented by Harry Rumpler, who was appointed Lenard’s CEO in July after spending several months as its COO.

“Lenard’s has traditionally been at the forefront of value-added chicken,” added Rumpler. “This will not change as our research and development team constantly looks at opportunities and market trends to excite our customers and keep our range fresh and exciting.”

Lenard’s operates 23 locally-owned stores and its products can also be found in several hundred supermarkets around Australia.

Pizza Hut Australia has introduced a late-night “surcharge” of 10 per cent for orders made after 10pm as it moves to combat inflation in pizza ingredients, chicken wings and fuel and labour costs.

Chief executive Phil Reed said it was part of enabling its franchise operators to manage escalating costs and a labour shortage in a business which had previously had many international students as delivery drivers.

“Historically, we’ve been very reliant on international students,” he said.

The surcharge applies to the whole order value, and doesn’t apply to orders received before 10pm.

Mr Reed said Pizza Hut has been winning market share as it stepped up digitisation of its stores and shifted to a delivery model. Sales July had been an all-time high of $25 million, and the group after the first eight months of calendar 2022 has achieved an overall same-store sales increase of 12 per cent compared with last year.

“A lot of the growth is organic sales,” he said. Pizza Hut, which has 256 outlets, is the No.2 player in the pizza market in Australia behind Domino’s Pizza Enterprises.

Domino’s Pizza last week said there were early signs that price pressures for key ingredients such as wheat and cheese are starting to flatten, but the company will have to lift some product prices to combat inflation.

Rising raw material costs ate into profit for Domino’s, which has extensive operations in Australia, New Zealand, Europe, Japan and Taiwan. Net profit fell 14 per cent to $158.7 million and its underlying net profit fell 12.5 per cent to $165 million for the year ended June 30.

Pizza Hut’s Mr Reed said his group had been selective in passing on price rises on menu items and had done comprehensive research on “price sensitivities” to keep ensuring that good value remained. He said in the past year input costs to franchise operators had risen 4.2 per cent. Long contracts for items such as cheese meant the group had been largely spared from the commodity price jumps in that ingredient.

Pizza Hut already has a 15 per cent surcharge in place for Sunday deliveries because of higher penalty rates.

Pizza Hut generated sales of $247 million in calendar 2021. Mr Reed said the group is aiming to reach between $275 million and $280 million for the 12 months to the end of December 31.

Domino’s chief executive Don Meij said last week his group hadn’t taken a blanket price rise approach across the board. Many menu items had price increases, but there was also a range of “inflation buster” products to reinforce value options to consumers, and to give them choice.

The price of many of what were originally the $5 range of value pizzas had gone up to $8, but Mr Meij said they now had more ingredients and still offered value.

Mr Reed said Pizza Hut had put through a small price increase on “bundle” offers comprising three large pizzas and three side orders which include the options of garlic bread, soft drink and dessert.

That had increased from $36.95 to $37.95. The late-night surcharge of 10 per cent, which was introduced last month, wouldn’t affect families who ordered earlier in the evening.

Mr Reed said the introduction of new menu items such as chicken wings had been very successful. New pasta dishes have also been introduced this week. Pizza Hut is selling about 2.5 million chicken wings a month.

Mr Reed said Pizza Hut is aiming to expand the number of outlets, but a roll-out plan has been curtailed somewhat in the past few months because of rising construction and building costs and a shortage of trades people.

Pizza Hut, which is a sponsor of the 2022 Supercars championship, has stepped up its advertising and marketing over the past year as the business accelerated. It had a one-off global fillip on Wednesday when many obituaries on former Russian president Mikhail Gorbachev mentioned his television ad for Pizza Hut in 1998. The clip went viral on the internet in the past 36 hours. Mr Reed posted the clip on his LinkedIn account on Thursday.

Pizza Hut Australia is owned by private equity group Allegro Funds.

Queensland-based Aromas Coffee Roasters has been acquired by local Indigenous-owned company SupplyAus Holdings for an undisclosed sum.

Aromas Coffee Roasters boasts a 47-year history, serving more than 300 locations in the state while SupplyAus was co-founded by Adam Williams, a Wiradjuri man, and Shane Andrews, a descendant of the Mununjali people in 2018.

SupplyAus CEO, Adam Williams, told Business News Australia, that this was a “major step to inspire other Indigenous entrepreneurs to have a go”.

“Buying a legacy brand like Aromas shows Indigenous kids and young people that even the biggest brands are within our reach.”

With the acquisition, the company plans to integrate some of Aromas Coffee’s operations with its own coffee portfolio – Dhuwa Coffee, which is sold in 900 Woolworths stores.

“That’s something we are good at with the rest of our brands, so to be able to roll that through with Aromas is something we are looking forward to.”

Alongside, the company is currently exploring opportunities to invest in indigenous employment with the rollout of its own Aromas Cafe and also grow the brand internationally.

SupplyAus now owns and operates a range of brands including Bunji Workwear, SupplyAus Medical, Jingeri Office National and Aromas Coffee Roasters.

IGA operator Metcash says Australians are keeping up the habit of shopping in their local communities even as pandemic restrictions ease as the company became the latest to report robust consumer spending over the past few months.

The ASX-listed retailer issued a trading update ahead of its annual general meeting on Wednesday revealing that sales are up by 8.9 per cent across its group for the first months of the 2023 financial year.

Food sales are up 4.3 per cent, while Metcash’s hardware sales across the IHG and Total Tools brands surged 19.5 per cent compared with the same time last year.

Liquor sales also jumped by 11.5 per cent as demand bounced back in bricks-and-mortar stores.

Inflation had some impact on the sales numbers, but the company highlighted it was also seeing strong consumer demand in the first months of the year.

Sales were “supported by continued preference for local neighbourhood shopping underpinned by the improved competitiveness of our independent retail networks, and by inflation,” the company outlined in a presentation to investors to be given by chief executive Doug Jones on Wednesday afternoon.

In an address to shareholders, Metcash chairman Peter Birtles said while there are uncertainties about consumer spending on the horizon, it was clear that consumers continued to do more shopping in their local neighbourhoods than they did before the pandemic.

“Importantly, this shift and momentum has continued into the first half of [financial year 2023]... confirming that shoppers are continuing to enjoy the improved competitiveness of our network stores, and the service levels that only independent locals can provide,” he said.

In June, Metcash reported a 2.7 per cent jump in profits to $245.4 million for 2022, with Jones saying the company’s supply chain was robust during a challenging time for product availability.

On Wednesday, the company flagged that despite strong sales momentum it was juggling increased supply chain and labour costs, and had been working closely with suppliers on ways to help shoppers manage the impacts of rising inflation.

Grocery giants Coles and Woolworths called out similar challenges when reporting their full-year financial results. Woolworths boss Brad Banducci flagged that customers were gradually moderating their shopping behaviour by trading up fresh produce for frozen, or choosing more affordable proteins.

Metcash said it wasn’t yet clear if inflationary pressures would change shopping behaviours in the near future.

“A higher rate of inflation has also continued into the first half of [financial year 2023], and there is uncertainty over its level going forward and whether it and other cost of living increases will impact
consumer behaviour in the retail networks of our pillars,” Birtles said.

UBS analysts said Metcash’s update confirmed that cost pressures would be a challenge for the business, but that the company was managing these well.

“We interpret this as cost pressures are a headwind but should not drive [profit] margin compression, which is pleasing and positions Metcash better vs peers (eg Coles and Endeavour Group),” analyst Shaun Cousins said in a note to clients.

Metcash shares opened 0.7 per cent higher at $4.15 and rose 1.3 per cent to $4.17 by early afternoon trade.