‘$5 is not a special’: Startling price increases that could come back to haunt major brands

The price of groceries has increased by approximately 24 per cent over the past five years, and Australia’s favourite snack foods haven’t been spared.

So-called “discretionary items” such as chocolate, biscuits, and chips have soared in price during that time period, with some of Australia’s best-known brands almost doubling in price.

It begs the question: Is there a price point at which consumers make the hard choice to stop purchasing their favourite snacks?

The answer is yes, according to consumer expert Gavin Northey from Griffith University.

“There is an absolute psychological price ceiling for every product category, and both research and history tells us once that ceiling is breached, demand can collapse very quickly,” he told nine.com.au.

Northey doesn’t think Australia is at that point yet, but if the impact of global conflicts and supply chain disruptions continues indefinitely, he warned we “may see a major shift in consumer demand, even for products we currently consider staples”.

Read more

For generations, one meat pie has been Aussies’ go-to. Now, it’s changing

Shoppers are making their feelings about some of these startling price increases known on social media.

One such complaint appeared on Reddit’s ‘Australia’ thread after a customer saw a Coles “special” for 170g bags of Smith’s chips in April, declaring a special price of $5.

“Five dollars for chips is not a special, Coles,” they captioned a photo of the display.

Northey cited a recent example of price increases going too far for US food giant Pepsico. When the company hiked the price of a standard bag of Doritos, Lay’s, and Cheetos to $US7 (approx. $10) for a standard bag between 2021 and 2024, customers stopped buying them in droves and switched to alternative brands.

This friction spread to the UK in 2024 when major grocery retailer Carrefour pulled Pepsico product from its shelves, a move Northey described as “global resistance to price increase”, although Pepsico later claimed they had ditched Carrefour.

The company’s aggressive price increases and subsequent drop in sales wiped out $50 billion in their market value, and they have been fighting to get it back ever since by discounting products by 15 per cent and running multiple promotions.

In Australia, Pepsico brands Doritos and Smith’s have also dramatically increased in price between 2021 and 2026, while the size of the packs has reduced.

Doritos have shrunk from from 175g in 2021 to 170g in 2024 and Smith’s chips have been reduced from 200g in 2021 to 175g, and then down to 170g in 2024.

During that time period the price of Doritos and Smith’s increased from $3.50 to $5. For Smith’s that’s a 42 per cent price increase for a significantly smaller bag.

Read more

Why the days of coffee freebies and perks could be numbered

Coles and Woolworths have been called out for so-called “sales” on these popular brands, leading to strong customer reactions on social media.

In fact, Doritos formed part of the Australian Competition and Consumer Commission (ACCC) action against Coles and Woolworths, which found the supermarkets briefly spiked the price of the product from $3.50 to $5 in 2022, then dropped the price to $4.50.

The court ruled Coles had engaged in misleading conduct with some of its “Down Down” promotions, while the outcome of the ACCC’s similar action against Woolworths is still pending.

New supermarket “price gouging” laws come into effect on July 1, which will prevent Coles and Woolworths from charging prices that are significantly excessive compared to the cost of supply and a reasonable profit margin.

How this will be policed is less clear.

Andy Kelly, Director of Campaigns and Communications at consumer group Choice, said of the new laws: ”

“With 44 per cent of households reporting they’re just getting by and 24 per cent finding it difficult, it’s more important than ever for the government to pursue every available measure to tackle this problem.”

“Consumers have lost a huge amount of trust in supermarkets in recent years, with confidence dropping from 48 per cent in March 2022, at the height of the Covid-19 pandemic, to just 21 per cent today.

“The new excessive pricing prohibition should help to restore some of that trust, but further reform is needed.”

Still, the two major supermarkets have been able to spin major brand price increases such as these seen by Pepsico into gold, reporting a surge in sales of their more affordable home brand snacks.

Coles and Woolworths’ home brand chips cost $2.20 or $1.26 per 100g for a 175g bag, which is 80c cheaper than the Smith’s special price and $2.80 less than full price.

Then there’s Aldi, where shoppers can purchase a 230g bag of the supermarket’s exclusive Sprinters chips for $2.69, or $1.17 per 100g, which is even less per unit price than Coles and Woolworths.

Northey said major brands and supermarkets “have to be conscious of the effect aggressive pricing might have on customer demand”.

“Shoppers have shown they will simply stop purchasing items they deem too expensive,” he said.

“Not only that – since the 2024 senate inquiry into supermarket pricing, aggressive pricing can also attract increased scrutiny from government regulators.”