Will more buyers mean more competition for meat stock? One must assume CostCo didn’t get to its leading supermarket position by paying a premium for its product. If that is the case, then presumably they must believe that,
1. There is a market in Australia with enough volume for them to make a good profit.
2. They are going to be able to source ‘product’ to sell at a good enough buy price to make a good profit.
This begs the obvious questions that farmers should/will be asking. Will there be additional competition to drive-up prices?
Will the standard of meat be below that currently provided? If the answer to these questions is, “No”, then how will the CostCo margins be gained in order to compete with such a strong existing duopsony? (2 dominating buyers)
What do you think?
Please leave your comments below.
