Supermarkets to push house brands

Australian supermarket giant Woolworths is expected to persuade more Kiwi shoppers to buy house brands, following its takeover of three big supermarket chains in New Zealand.

Food producers have warned the move could drive some of them out of business, as the products may be made across the Tasman or in China.

Woolworths Australia has just recently secured the Foodtown, Countdown and Woolworths chains in New Zealand in a $2.7 billion deal, which analysts expect will bring lower prices as well as more petrol stations attached to supermarkets.

Across the Tasman, though, Woolworths Australia has been sending shoppers into a spin, as it plans to more than double the number of house brands on supermarket shelves in a bid to lift profits.

The shift is worrying Australian suppliers who fear it is an excuse to source more cheaper products from China.

The New Zealand Food and Grocery Council has also warned that cheaper supermarket prices, and the introduction of more generic brands produced overseas, could force some local manufacturers to close shop.

Council chief executive Brenda Cutress said 150 members who supplied packaged foods to supermarkets were waiting to see what Woolworths would do.

"Obviously everyone likes to think that everyday low prices are wonderful. But an awful lot of manufacturers can go out of business as a result and you can lose a lot of your domestic manufacturing base and lose jobs and so on."

However, the Australian Consumers Association has warned Kiwis not to get too excited, saying it had taken the arrival of a third supermarket chain, German discounter Aldi, to cut food prices across the Tasman.

Aldi has 4000 stores worldwide, and has said it is eyeing the New Zealand market.

Woolworths corporate communications manager Clare Buchanan said Woolworths was committed to supporting local suppliers in both New Zealand and in Australia.

- HERALD ON SUNDAY