In 2014, Woolworths Limited (ASX: WOW) and Coles (owned by Wesfarmers Ltd (ASX: WES)) were believed to control 74% of the local grocery market.
Having grown rapidly throughout the eastern states, German giant Aldi controlled a further 10%, followed closely by Metcash Limited's (ASX: MTS) IGA and Foodworks stores.
The type of dominance enjoyed by Woolworths and Coles doesn't come along easily, and both companies have wasted no time driving wide profit margins at the expense of Australian producers and farmers.
From allegations of misleading conduct to accusations of bullying and everything in between, the two supermarket giants have cut deep into the pockets of producers and farmers alike.
Further, private label products have destroyed the brands of Australian producers, in an effort by the two big players to become vertically integrated.
We need to look no further than Coca-Cola Amatil Ltd (ASX: CCL) as an example of what happens when a company's brand is consumed by a price war and competition.
Time to push back
However, at a time when Woolworths may begin heavily discounting prices to recapture market share from its number-one rival, the stage may be set for Australian producers and farmers to start pushing back.
At the weekend, Fairfax Press quoted former Victorian premier and current independent arbiter to Coles, Jeff Kennett, who said international competition for products could turn the tables on the supermarket giants.
"In the last few years there have been more and more overseas buyers coming in to look at produce," Mr Kennett said. "I think we will see a massive change in demand for Australian agricultural produce."
He says suppliers would once again become "king" across many supermarket items. "The gate has just been opened slightly and in the next 10 years, not through technological disruption but through people disruption and cost disruption, we will see the gate substantially opened," he said.
Foolish takeaway
As I wrote last week, research suggests that in the next 35 years the world will need to produce between 60% and 70% more food than is currently available, as 1 billion people rise from poverty.
Australia's proximity to Asia, stable economy and government, and relatively large amount of arable land, means our farmers may enjoy some very strong tailwinds in coming decades.
We've already seen the products of companies like Bellamy's Australia Ltd (ASX: BAL) and Blackmores Limited (ASX: BKL) flying off the shelves quicker than they can be produced.
After many years of adverse weather and heartache, for our farmers' sake, here's hoping suppliers are fully rewarded for all their hard work, for many years to come.
