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.