The Australian Financial Review reported on May 5 that Ian McLeod, MD of Wesfarmers-owned Coles – which posted 2012 sales of AUD $33.698bn or US $34.26bn – was set to declare start a price war with multinational suppliers including CCA.
McLeod told the paper: “If I go into Asia, where I was recently, and I see a bottle of Coca-Cola that is selling for one-third the price in Australia, that raises another question mark.
“You might expect it to be 10%, 20% cheaper, but when it’s 60% cheaper then you start to question why it should be so much more expensive in Australia. And those are the challenges that we will then put back to suppliers and say ‘why is that?’”
“‘Why can’t we get a better price for the Australian customers?” McLeod asked.
‘Do we really want a country where staff are paid $2.50/hour?’
Presented with Coles’ position, a CCA spokeswoman told BeverageDaily.com today that Davis asked a rhetorical question to the audience at CCA’s AGM today, in defence of the higher Australian prices – that CCA charges to both retailers and, since it follows on, consumers – vis-a-vis Asia.
“Do we really want a country where our workers are paid $2.50 or less an hour? Of course we don’t.
“Our wage rates in Australia are higher - as are all those other things we take for granted - like healthcare costs, legal costs, insurance and rent,” Davis said.
No other consumer goods company in Australia had invested more in innovation and technology to reduce the costs of doing business than CCA, Davis added, and the company had the lowest cost of doing business ratio of any bottler in the Coca-Cola system.
”I firmly believe that we must have a manufacturing industry in this country,” Davis said. “Food security is crucial.”
However, McLeod pre-empted some of Davis’ comments, insisting to the Australian Financial Review interview that multinational suppliers would “argue about markets operating in different ways, [and that the] cost of production might be higher”.
“But when we look a bit further, we believe that the profitability for those suppliers is higher in Australia than it is in other markets,” he said.