Australian industry minister slams Woolies, Coles

04-Nov-2011 - Last updated on 04-Nov-2011 at 08:14 GMT

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A day after Australian supermarket chain Woolworths said that private labels are at the centre of its expansion plans, it came under a stinging attack along with its rival Coles from the Australian industry minister.

Addressing the Australian Food And Grocery Council (AFGC), Senator Kim Carr said that his office had received numerous complains against abuse of power on the part of Woolies and Coles’ dealings with food processors.

He urged companies to take their complaints to the Australian Competition and Consumer Commission (ACCC), which said recently that it is keeping an eye on the two chains and their increasing market power.

Carr also said that Woolies and Coles increasing their focus on private label goods would damage suppliers even more, adding that private labels are not about consumer rights, rather about supermarket profits.

He added that a rush to increase private label products would kill off any incentive food manufacturers have to innovate and that margins on those products would be too thin to ensure their survival.

Comments come after Woolies announcement for private labels

Carr’s comments came a day after Woolies announced that it has firmed up a five-year plan to double its customer take‐up of private label products that have seen a growing demand in the past year.

Tjeerd Jegen, managing director of Australian supermarkets at Woolworths, said in a statement that there is a clear opportunity to capitalise on customers’ increasing level of trust in and appreciation for Woolworths’ own brands.

“We have three very successful and well trusted multi-category own brands [Select, Homebrand and Macro] and there is a fantastic opportunity to make them better,” said Jegen.

“Customers also tell us that they appreciate the fact that own brands inject additional competition into the grocery sector by offering the same or better quality as national brands but at a cheaper price,” Jegen added.

Food body welcomes Carr’s comments

AFGC chief executive) Kate Carnell said that said it was very encouraging to see the Federal Government recognising that there was a real problem with retail concentration and market dominance, which needs to be urgently addressed.

A new AFGC report called 2020: Industry at a Crossroads released today forecasted that the retail market is expected to remain highly concentrated over the next 10 years, with private label products expected to grow strongly.

“It fantastic to see Minister Carr and the Federal Government showing leadership on this issue and looking for ways of creating a level playing field in Australia’s retail market,” she said.

Retailers are killing the Australian F&B industry

Posted by Trevor Rahill, 04 November 2011 - 15:25 GMT

There is room for Private Label but not to the detriment of the manufacturers out their trying to stay in business. Woolworths and Coles make no bones that they are competing against their suppliers but in fact they are turing their suppliers into contract manufacturers who have to develop cheaper products with lower margins that in fact will be sold as direct competition against their own brands. This is an untennable situation exacerbated by the duopoly the retailers have, but to resist the power of the retailers will only serve to hasten their demise. In the USA or Europe, Private label is growing as well but you dont hear the same outcry because these markets offer many more outlets and competition, but not in Australia.

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