HelloFresh boss takes aim at supermarkets for ‘sneaky’ tactics
![Australia’s large supermarkets are facing a Senate inquiry into pricing practices in the sector. Supplied](https://images.thewest.com.au/publication/C-13875867/8be30590127e0278fe267e1a6bb38b49a5c908b6-16x9-x0y0w2048h1152.jpg?imwidth=810&impolicy=wan_v3)
The boss of HelloFresh has taken aim at Australia’s biggest supermarkets over pricing as he promises a “price lock” on food for months to come.
Tom Rutledge, chief executive of the popular meal delivery service, hit out at the big supermarkets for their alleged “sneaky” tactics and promotions, which he claimed encouraged multiple unnecessary purchases, pushing grocery bills higher.
“Over the past 12 months, we’ve seen the big supermarkets not only pass on higher costs but also improve their margins at the expense of Aussie households, all at a time when they most needed support from trusted institutions,” he said.
“That margin improvement was achieved under the guise of inflation is disingenuous and shows a disregard for customers’ ability to understand what was truly going on.”
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He said locking prices was an effective policy businesses could introduce to help customers and HelloFresh, a Frankfurt-listed $1.7bn company, has promised to leave the price of its everyday plan mealkits unchanged until the end of the June.
Meal plans cost $70 to $220 per week and have remained at the same price since August 2022.
“We have absorbed higher costs, invested more value in our meals and we now commit to further locking these everyday low prices in until at least EOFY 2024,” Mr Rutledge said.
“By doing this, we hope to provide Aussies with some confidence that the cost of their weekly meals won’t change.
“Locking prices will help Aussies better plan for their weekly meals and we want the big supermarket brands to do the same.
“What they are asking for is consistency, not quick promotions and cheap product alternatives.”
The strain of rising grocery bills has stormed the centre of Australian politics, as millions of households experience stress at the checkout.
About 42 per cent of households, or an estimated 3.9 million, said grocery bills were one of their chief financial stressors, according to a Finder survey released in February.
The figure marks a 26 per cent increase, or a bump of 1.5 million households from just two years ago.
Research from HelloFresh suggests 8.2 million Australians go above their budget on weekly grocery shops, with a quarter overspending by $26 to $50 a week, amounting to an annual loss of more than $2000.
The survey also said one-third of Australians had “no trust” left in the major supermarket brands.
![HelloFresh’s spicy tofu tacos with mango mayo. The company operates across Europe, North America, Australia and New Zealand, delivering mealkits and recipes to households. Supplied](https://images.thewest.com.au/publication/C-13875867/4128224eab1e63080ee0fb79eaef568cf3f7eaef.jpg?imwidth=810&impolicy=wan_v3)
But Australia’s two largest retail brands, Coles and Woolworths, have hit back at Mr Rutledge’s criticisms, saying “price drops” and “price locking” are common practice at their supermarkets.
“We’ve been doing it for several years,” a Woolworths spokeswoman told NCA NewsWire.
“We constantly have over 6000 weekly specials and around 4000 products on our everyday low-price programs ‘Low Price’ and ‘Prices Dropped’.”
The company’s Prices Dropped for Autumn program, launched in late February, locks in lowered prices for a sweep of items until the end of May, including a 500g pack of beef stir fry, which has dropped from $12 to $10, and Bertocchi premium boneless leg ham, which has gone from $31/kg to $26/kg.
Coles, meanwhile, locked in reduced prices for a range of goods for three months as part of its January “Down Down” program.
Beef sizzle steak 400g dropped to $11 from $13, a 15 per cent gain for consumers, while rump steak moved to $22/kg from $28, a 21 per cent fall.
The price drops haven’t been enough to stave off crumbling consumer sentiment towards the brands as both companies booked handsome profits during an inflationary squeeze.
For the half-year ending December 31, 2023, Woolworths Group posted a 4.4 per cent increase in revenues to $34.6bn compared to the same period in 2022, with its Australian Food division contributing $25.9bn to the figure, a 5.4 per cent increase.
![Australia’s large supermarkets are facing a Senate inquiry into pricing practices in the sector. Supplied](https://images.thewest.com.au/publication/C-13875867/8be30590127e0278fe267e1a6bb38b49a5c908b6.jpg?imwidth=810&impolicy=wan_v3)
Profits at the company swung to a heavy loss following a writedown in the value of its New Zealand business and a fall in the value of its stake in ASX-listed Endeavour Group.
With those one-off costs, Woolworths posted a $781m loss for the half-year compared to a $845m profit in the prior period.
Without the impairments, Woolworths would have booked a $929m profit, or a 2.5 per cent increase from the corresponding period.
Coles Group delivered a half-year profit of $594m.
A Senate inquiry will soon test whether Australia’s food behemoths have engaged in price gouging practices, something Woolworths chief executive Brad Banducci has strenuously denied, telling investors in the half-year earnings call the company operated in an “incredibly competitive market”.
“It’s an inconvenient truth to many,” he said, citing the “material penetration” of German retailer Aldi into the supermarket space and fierce competition in the “everyday needs” categories, which include home care, personal care, pets and childcare items.
“You see essentially every retailer getting into this category,” he said.
The Senate Select Committee on Supermarket Prices is scheduled to table its report on May 7.
Originally published as HelloFresh boss takes aim at supermarkets for ‘sneaky’ tactics
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