When Aldi opened its first supermarket in Sydney in 2001, the stage was set for a fight with Woolworths and Coles. At the time, Australia's two biggest supermarkets controlled about 71% of the grocery market. Aldi was an unknown brand, stocked fewer products than its rivals, and premium real estate was already taken.
When Aldi opened its first supermarket in Sydney in 2001, the stage was set for a fight with Woolworths and Coles. At the time, Australia's two biggest supermarkets controlled about 71% of the grocery market.
Aldi was an unknown brand, stocked fewer products than its rivals, and premium real estate was already taken.
To be successful, it needed a trump card. Its strategy? To make 90% of its products "own brands", often sold at lower prices.
By about 2015, it had captured about 9% of Australian supermarket sales.
But recent reports show Woolworths and Coles are holding their smaller competitors at bay. In part, they've done it by adopting some of Aldi's own sales tactics.
Last year, the national competition watchdog - the Australian Competition and Consumer Commission - estimated Woolworths had 38% of national supermarket grocery sales, followed by Coles with 29%. That's a combined total of 67% - not far below their joint total in 2001.
Meanwhile, Aldi had about a 9% market share in 2025, the same as more than a decade ago. Metcash (as a proxy for the independent supermarkets it supplies) had 7%.
More recent figures from analysts UBS suggest Woolworths' market share has crept higher to 40% - meaning the two biggest players have a joint share that's barely changed since 2001.
So how have Woolworths and Coles been hanging onto customers?
One of their key strategies has been to follow Aldi's lead: adding thousands of "own brand" products over recent years.
More commonly known in the past as "home brands", "own brand" products offer an alternative for consumers looking for better value for money.
Once seen as low-quality, they now have a better reputation and can be found everywhere, from ice creams to laundry powder.
Some are obvious, with names such as Coles Simply or Woolworths Essentials. But there are many products that are simply "own brands" by another name, such as Woofin' Good pet food (Coles) or Smitten (Woolworths cat food).
In the past week, Coles and Woolworths released their 2026 annual reports.
On Tuesday, Coles reported a A$1.09 billion net profit to June 28 this year.
Its report highlighted Coles now has around 5,600 "exclusive to Coles products". That's up by 1,600 in the past year alone.
Coles' sales revenue rose to almost A$41.5 billion, up 5.1% (excluding tobacco sales). But with cost-of-living pressures making shoppers "highly value-conscious", Coles' own brand products performed even better:
Our Exclusive to Coles portfolio remained an important source of value and differentiation, with sales continuing to outpace overall sales growth, increasing 6.1%, and Coles Finest growing 9.2%.
With market penetration reaching 35%, Coles' own brands are now purchased by more than one in three customers who shop at their stores.
On Wednesday, Woolworths reported a A$1.14 billion net profit for the year.
While Woolworths' annual report contains less detail on its own brands, it confirmed more than 445 new and 680 "refurbished" own and exclusive brands were launched in the past year alone.
Woolworths' Australian supermarket sales rose to $53.9 billion over the year to June 28, up 5.9% excluding tobacco sales. Sales of own and exclusive brands grew almost as fast, up 5.5%, particularly in meat and fresh food.
Independent surveys regularly show Aldi is a cheaper place to shop than Woolworths, Coles or IGA.
Yet Aldi is fighting to retain customers, with industry analysts recently concluding its bigger rivals are "winning share" among shoppers.
Looking ahead, Coles and Woolworths have more own brand expansions on the way. For instance, Woolworths plans to build on its current "La Mesita" Mexican, "La Gina" Italian and "Lantern Alley" Asian food ranges - none of which are obvious own brands - with new Middle Eastern and South Asian food ranges.
For supermarkets and shoppers, more own brands may seem like a win-win.
Supermarkets have the potential to increase their profitability by selling their own products, as long as they keep a full range of merchandise. And consumers have more own brand options to choose from, which can be quality products at lower prices.
It's more complicated for supermarket suppliers. These can be companies vying for space on crowded supermarket shelves, through to farmers supplying products like milk for supermarkets to sell under their own brands.
A recent Food and Grocery Code Supervisor, survey of 419 suppliers found some positive trends. More than half (56%) reported they were always treated fairly and respectfully by the big four supermarkets: Woolworths, Coles, Aldi and Metcash, while 74% reported "no issues at all" with them.
But there were still some areas of concern, including almost half of suppliers describing price negotiations as involved or challenging.
Many smaller businesses noted "they cannot absorb costs in the same way as larger competitors". One supplier said "supermarkets' internal structures favour corporate fruit production, not family farms".
Looking overseas, there has been a trend for some big retailers to take over some of their suppliers' business, in what's known as "vertical integration".
In the United States, Costco and Walmart aren't just retailers anymore; they're also food producers. For instance, Costco set up a US$450 million poultry facility to own the supply chain for its discounted rotisserie chickens: locking in control over costs from farm to the store.
But this isn't without risks. The more things you do, the greater the risk - like having all your eggs in one very large basket.
Australia hasn't seen that level of vertical integration yet. But it's a trend worth watching in future.
TheConversation.com
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