Woolworths price warning as supermarket makes little-known move: 'Dominate'

Yahoo

12-04-2025

The ready-made meal sector has evolved dramatically from the ice-encrusted microwaveables relegated to the supermarket freezer section. Now, Coles and Woolworths shelves are packed with calorie-controlled fresh fare targeted to the time-poor Australians.
The booming industry is expected to be worth $1.9 billion in the next five years, with Woolworths making a major play at the sector this week that could be a concern for shoppers.
The supermarket giant stocks Woolworths branded meals, now including larger offerings to cater to families, and brands like Strength Meal Co, which retail for about $9.95 depending on specials.
Many wouldn't know Woolworths was cleared by the Australian Competition and Consumer Commission (ACCC) to acquire Beak & Johnston Holdings, the company that owns Strength Meal Co, on Wednesday.
Woolworths told Yahoo Finance the proposed acquisition would help meet customers' growing demand in the expanding industry.
But, there are concerns the Fresh Food People could drive costs up by blowing the rest of the competition out of the water.
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'While Woolworths may initially keep prices competitive to attract customers, reduced competition in the long term could lead to price increases, especially if Coles and Woolworths continue to dominate the sector,' RMIT professor of finance Angel Zhong told Yahoo Finance.
'However, Woolworths may expand its ready-made meal offerings, providing more variety and convenience for shoppers, particularly in urban areas where demand for quick meals is high.'
That could include at Woolworths' more than 100 Metro stores dotted around the country, which are smaller stores catering to shoppers looking for convenience and wanting to 'grab and go'.Zhong said the impact on consumers would depend on how Woolworths decides to integrate Beak & Johnson's products into their offerings.
'While large acquisitions can sometimes lead to higher prices due to reduced competition, Woolworths might also leverage economies of scale to keep prices competitive,' she said.
The competition watchdog found the acquisition was 'unlikely' to have a substantial anti-competitive effect and Woolworths welcomed the move.
'Woolworths has been a customer of Beak & Johnston Group (B&J) for more than 37 years with the company providing a range of popular Woolworths-branded products including lasagnes, ready meals, and pies,' a Woolworths spokesperson told Yahoo Finance.
Woolworths currently holds a minority 23 per cent interest in subsidiary and ready meal provider B&J City Kitchen.
Its acquisition is still subject to approval from New Zealand's regulator.
The ready-made meal industry has been growing in popularity as time-poor consumers look to cut back on meal preparation, with Zhong noting there had been increased demand post-pandemic due to consumers' busier lifestyles.
The biggest players in the industry are My Muscle Chef, Lite n' Easy, McCain Foods and Vesco Foods, who sell Lean Cuisine in Australia.
Coles subsidiary Chef Fresh previously purchased rival ready-made meal supplier Jewel Fine Foods in 2020, after it went into voluntary administration.
Ibisworld has forecast revenue from the prepared meals production industry to increase by 1.1 per cent over the next five years to $1.9 billion.
Woolworths told Yahoo Finance the proposed acquisition would continue its focus on meeting customers' growing demand in the 'expanding' industry.
'Customers are looking for value and convenience now more than ever, and we're seeing significant opportunity to deliver this in the ready meal category,' a spokesperson said.
Coles, meanwhile, has reported sales of 'convenient food solutions' increasing by 50 per cent over the past three years, with the supermarket finding nearly eight out of 10 shoppers decide what they will eat within a day of consumption.
Zhong said Woolworths was strengthening its position in the growing ready-made meal market and it could make it harder for smaller companies to compete with the supermarket giants.
'To stay competitive, smaller companies might need to innovate more aggressively, focusing on niche markets or unique product offerings that differentiate them from the major players,' Zhong said.
"Woolworths' acquisition could lead to changes in supply chain dynamics, potentially affecting suppliers and distributors within the sector."
Coles and Woolworths currently control around 65 per cent of Australia's grocery market.
'This acquisition further entrenches their dominance, making it harder for independents like IGA, Aldi, or specialty meal providers to compete,' Zhong said.Sign in to access your portfolio