Are we willing to pay extra for “Made in Australia”?

At the supermarket, how many of us actually checked where the product was made, before buying? Probably none or very few.

What was the criteria for choosing one product over the other? In most of the cases it was Price and “perceived” quality. Assuming that quality was same, we always chose the cheapest available product.

Through the “Free trade” movement covering a few decades now, our brains and minds has been moulded into believing that the world is one and as consumers, it didn’t matter where the goods were produced. Complementing free trade was the concept of “consumerism” which encouraged us to consume more and more and ensured that we had enough product spread / choices and consumer rights were protected.

Has the covid-19 pandemic forced us to suddenly change our criteria for selection? We have seen “Made in Australia” movement gaining strength.

Price elasticity

For products of daily use, “quality” isn’t the differentiating criteria but “Price” is. (All products fulfil minimum quality standards)

For example, a simple 500ml hand-wash produced overseas is selling for $2.00 / $3.00 as opposed to an Australian product selling for $8.00. (Below is a picture of a local supermarket). We see that the low priced hand-wash have vanished from the shelves whereas the Australian brands are still sitting on the shelves. You definitely see “price matters”.

Let’s take couple of more examples of fast moving products that we use daily — tomato sauces and cans.

(Image attached) Tomato cans selling for 80c is still sitting on the shelves as we see cans priced $1.70 are off the shelves. (It will ok to assume that those cans were “Australia made”).

Similarly, Sauces selling for $1.50 is still on the shelves whereas shelves are empty for sauces selling for $1.75 (I think they were Australian made). Whereas, “Australian” branded sauces priced at $3.00 is still sitting on the shelves.

Observation — the market is a bit elastic to price sensitivity as long as the price difference is not big in value terms. Consumers refuse to pay $8 for a “Australia made” hand-wash that is available for $3 and on the other hand willing to pay $1.70 for a “Australia made” can of tomato that is also available for 80c.

Inference — “Made in Australia” is very important and so is the price at which we buy/sell.

It is important that we understand the impact of pricing on the choice of a consumer. We have to be price competitive.

by Partha Mazumdar