Mad Butcher losing money on milk price
The Mad Butcher says its milk price special of $1 a litre is selling well, although the chain is losing money on the deal.
On Monday, the retail meat chain began discounting the milk, undercutting supermarkets which sell milk for about $2.45 a litre minimum.
‘‘We’re doing it as a loss leader. Some Pak’n Saves and Countdowns have matched us in prices but only in stores that are near us,’’ Mad Butcher chief executive Michael Morton said.
The offer is valid only until this Sunday and is for purchases of Cow & Gate 2 litre milk only. Customers are limited to two 2L bottles per family per day.
The company sources its milk from Goodman Fielder. Fonterra supplies virtually all the fresh milk in New Zealand, including to Goodman Fielder.
Foodstuffs public relations director Antoinette Shallue confirmed some individual stores had reacted to competitive milk pri- cing in their local market, but the supermarket group had not taken a national position.
‘‘There will always be products where we compete really aggressively and bread and milk are examples of this. At $1 per litre we would be losing money as it is well below our wholesale cost.’’
The milk price cut follows Countdown’s decision in mid-July to drop the price of its Homebrand bread range to $1 a loaf for a year.
Coriolis Research managing director Tim Morris did not think supermarkets would follow Mad Butcher’s example. It made sense for Mad Butcher because specialist retailers had to ‘‘constantly bring attention to themselves’’.
Supermarkets made good money on milk because they sold a lot of it. ‘‘A fast nickel is better than a slow dime, in American parlance.’’
Morton said every retailer who bought milk had been ‘‘hounding’’ suppliers to drop the price. ‘‘There’s a lag between the time global dairy prices fall and the price of milk drops.