Woolworths roast chicken photo from Facebook.
Woolworths roast chicken photo from Facebook.

Why Aldi doesn’t sell chooks

COLES and Woolworths sell 90 million roast chooks a year, but discount rival Aldi refuses to do so even though its stores could easily house a BBQ chicken stand.

Now Aldi Australia chief executive Tom Daunt has revealed the reason. Speaking to The Australian, Mr Daunt said the complexity of the logistics, storage and sale of roast chooks frightened him.

The hassle is not worth the extra profit. "Our philosophy is, let's focus on what matters and do the right thing about the cost," he told the paper.

"It is choosing what not to do, right? And we decide every day things not to do because that keeps our business simpler and more efficient. And that efficiency … is what underpins a very low cost of doing business, which underpins our ability to serve great quality products at the lowest price."

In March, a $1 increase in the price of roast chickens at Coles and Woolworths from $8 to $9 was described as an "industry-changing event" that could signal the end of the "race to the bottom" by one retail analyst.

"From our estimates, at $8 no supermarket makes any profit from selling barbecue chickens and Woolworths sells around 50 million chickens annually and Coles sells just over 40 million," Bank of America Merrill Lynch analyst David Errington said in a note.

"A $1 price move is material but more importantly to us is a likely symbol that Coles and Woolworths are now looking at ways to improve profitability without compromising competitiveness."

Aldi last year hit annual sales of $8 billion for the first time and now holds about 12.1 per cent market share of Australia's grocery sector, according to Roy Morgan.

In the space of 17 years, the notoriously tight-lipped German discount chain has grown from two stores in Sydney to 500 nationally, leapfrogging IGA to become the country's third-largest supermarket.

But it has also faced criticism for being overly "secretive", as outspoken entrepreneur Dick Smith recently said in blaming Aldi for the closure of his Dick Smith Foods business.

A day earlier, he issued an open letter to owners Karl Albrecht Jr and Beate Heister, calling on the pair to show their faces in Australia and explain their "long-term plans".

Mr Smith said Aldi's relentless discounting would force local producers out of business. Those claims were vehemently rejected by Aldi, which pointed out it employs more than 11,500 Australians and partners with more than 1000 Australian suppliers.

Speaking to reporters in Sydney last month, Mr Daunt admitted that Aldi's habit of reticence had led to "inaccurate and misinformed information" about the supermarket's operations.

"We've definitely been guilty in the past of focusing on running the business, on taking care of customers, and we've invested no time or effort in informing interested parties in what on earth we're doing," he said.

frank.chung@news.com.au


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