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Milk bottles on supermarket shelves - Source: ONE News -
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Federated Farmers hopes a "price war" will ramp up after several stores slashed the cost of milk yesterday.
Nosh Food Market reduced the price of its Cow and Gate milk yesterday to $1 a litre, sparking one Pak 'n Save store across the street from its Hamilton store to match the price cut.
Nosh has stores in Auckland, Hamilton and Matakana.
Now Federated Farmers is calling on retail outlets, and particularly supermarkets, to do the same.
"If dairies can sell milk cheaper and a small supermarket like Nosh can sell it as a loss leader, surely Foodstuffs and Progressive can do the same?" said Federated Farmers Dairy chairman Willy Leferink.
"Federated Farmers hopes this milk skirmish is the first step in a wider retail milk price war between Foodstuffs and Progressive. It's happened in the UK and Australia so why not here?"
Big supermarkets rely on being convenient, Leferink said.
"But convenient doesn't make them the cheapest."
It was obvious that the price of milk was driven by the retail sector. Some stores in Wellington sold two litres of budget milk for $2.99 while others sold the same bottle for as much as $3.65.
"That's not only 22% more but tells me that margins at the retail end are pretty healthy," Leferink said.
Nosh has reduced the price of its Cow and Gate milk by more than 50% and said it will keep the reduced price until the end of the month.
The move prompted daycare centres and kindergartens to erect signs informing parents and caregivers of the reduced price.
Nosh admitted the move was a "token gesture" but said it was immoral for soft drinks to be cheaper for New Zealand families than milk.
"Milk is a basic commodity and should be made available to all New Zealand consumers, not just those who can afford it," Nosh director Clinton Beuvink said.
Nosh is losing about 50 cents on each bottle of cut-price milk it sells, but Beuvink said he hoped the move would "get the ball rolling" for an overall drop in local milk prices.
Rob Chemaly, retail general manager of Foodstuffs Auckland, which owns New World and Pak 'n Save, said: "We can confirm that Foodstuffs will not be adjusting its prices in response to the Nosh discounts.
"As always, our owners have the ability to set their own prices in-store and it is possible some stores may choose to offer further discounts."
Progressive spokesman Luke Schepen, whose employer owns Countdown, said there were "no plans at this stage" to cut the price of milk. He accused Nosh of using marketing tricks to "bait customers into walking into their stores".
Consumer New Zealand praised Nosh and said there was no reason why the bigger chains could not do the same.
"We often see service stations and dairies selling milk cheaper than the big supermarkets, so it just goes to show it can be done while still making a profit," said Consumer NZ chief executive Sue Chetwin.
