The Australian supermarket landscape is dominated by two names – Coles and Woolworths. Not only this, but Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) shares also dominate the consumer staples sector in terms of market share.
In fact, data from the ACCC shows these two companies combine for 67% of supermarket grocery sales nationally.
These supermarket giants also make up important parts of many investors' portfolios.
But which presents more upside this year?
Let's compare the two.
2025 performance
Coles and Woolworths shares brought very different returns for investors last year.
Coles shares rose by approximately 13.5% in 2025.
Meanwhile, Woolworths shares fell by 3.6%.
For comparison, the S&P/ASX 200 Index (ASX: XJO) rose 6.26%.
The S&P/ASX 200 Consumer Staples Index (^AXSJ) fell just over 1%.
This strong performance from Coles was driven by solid supermarket sales growth and earnings in FY25.
In its full year results presentation, the company said Group EBITDA and EBIT from continuing operations (excluding significant items) increased by 11.0% and 7.5% respectively (normalised) underpinned by strong growth in Supermarkets earnings.
Meanwhile, Woolworths shares slumped on weaker sales results as earnings missed analysts expectations.
In August, Woolworths shares dropped 12% in a single day following earnings results.
In August, the company announced:
- EBIT (FY2025) declined 12.6% to $2.75 billion.
- Net profit after tax (NPAT) fell 17.1% to $1.39 billion compared with FY2024.
- Final dividend declared at 45 cents per share, fully franked, down 21.1% from the previous year's final payout.
What are experts tipping for 2026 for Coles and Woolworths shares?
Both of these stocks may appeal to investors looking for defensive options.
Defensive shares can help protect your portfolio during periods of heightened market volatility and economic downturns.
Coles and Woolworths shares fall into this category because demand for their products (essential groceries) remains high even during an economic downturn when consumers reduce their overall spending.
On New Years Eve, The Motley Fool's Samantha Menzies outlined the case for Woolworths shares now presenting value for investors after a weak 2025.
Meanwhile, Macquarie is still bullish on further share price increases from Coles.
The broker has an outperform rating and $26.10 price target on its shares.
This indicates a further upside of more than 21% from today's opening share price of $21.44.
Elsewhere, TradingView has a 12 month price target of $23.83, which indicates an upside of approximately 11%.
