Australians' sweet tooth trumps pie love

About Latest Posts Catherine Baab-MuguiraCatherine Baab-Muguira is a Fool.com.au analyst/writer. A Fool since 2010, she comes at investing by way …

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fancy a lolly instead of a meat pie? You're not alone.

Australians' snack habits are changing, with ABC news reporting a "19 per cent jump in demand for chocolates and lollies from 2010 despite the global financial crisis cutting impulse buying" while meat pie consumption has fallen over the same period. Data comes courtesy of BIS Shrapnel's Foodservice unit.

The death of the corner shop 

Not only are snack habits changing, but consumers are purchasing more of their snacks at petrol stations with convenience stores inside, rather than at independent, free-standing convenience stores, which now make up just 12% of the market versus 20% of the market in 2007.

No doubt also contributing to the death of the corner shop is the continued rise of Australia's supermarket duopoly, Woolworths (ASX: WOW) and Coles, owned by Wesfarmers (ASX: WES) as well as smaller players like Metcash (ASX: MTS), operator of IGA stores. All three chains also operate convenience stores, including Woolworths mini-stores in Caltex stations, Coles Express, and IGA Xpress.

For better or for worse, the long term trend in the Australian market mirrors that which has taken place in markets like the United States, where Walmart (NYSE: WMT) and major supermarket chains have largely driven out the mom and pop corner shops of yesteryear. Classify it as regrettable but inevitable.

The takeaway for investors

With its strong brand (estimated to be worth nearly US $5 billion, according to ad agency Interbrand), incredible market share, and a highly effective distribution network, Woolworths offers a great deal to Aussie investors. It's a stellar business with great, homegrown management to boot.

Yet with shares trading for roughly 19 times earnings, or an EV to EBITDA ratio of about 10, Woolworth shares don't necessarily offer compelling value currently.

In fact, many investors are now looking to smaller ASX companies for growth and the prospect of quickly increasing profits. You can get two such ideas FREE now in our brand-new investment report, 2 Small Cap Superstars. Just click now, it's free!

More reading

Four Warren Buffett myths debunked

House prices post biggest gain in 3 years

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.

 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »