Thats exactly how they operate, irrespective of the cost price coles and woolworths have very complex trading terms and in these there will be a dot point that argues a base price and it is then up to the supplier to fund a rebate to fund the diff. The arguement is the increase in volume will drive efficencies and overall bring the cost down. On the other hand is a perminetly lower price of a product going to increase sales of the catergory of the product or just that brand? My expereince has been that in the long term consumers get used to lower price and therefore do not continue to purchase a volume that drives efficency, generally an increase in sales will come but it will be at the expense of other products in the cateregory. Don't get me wrong i like a cheaper price on beer and could be swayed to perchase a carton of carlton draught at that price, but long term i think this will do more damage than good. I am also glad that a supplier has grown a back bone to stand up to the supermarkets, I only wish that the milk egg suppliers would have done the same.
Then there is the issues arising with effects of these cheaper prices held at the big boys will have on smaller retaillers and independent bottle shops.
Jan