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Coca-Cola Amatil boss enters supermarket debate

Terry Davis, chief executive at Coca-Cola Amatil (CCA) has announced his support for the ACCC's investigation into alleged bullying tactics by the supermarkets, but insists the government needs to step in too.

Davis told the AFR that rather than having an industry ombudsman, Australian manufacturers need the government to take action and inspect supermarket practices, including forcing prices down to such a degree that they become "loss leaders."

"They [supermarkets] have responsibility to use that market power wisely and for the good of their shareholders but also the good of the communities they operate in, just as we have a responsibility to be a good corporate citizen in the communities we operate in," he said.

CCA's SPC Ardmona brand has suffered because of competition from cheap imports, with up to 90 percent of packaged fruit and vegetables now imported from countries including Thailand, South Africa and Vietnam.

Davis added that the Sheparton fruit growing community has also been hit hard by supermarkets prioritising private label products.

Accelerating depreciation and restructuring the Fair Work Act to improve flexibility and cut costs should be focus areas for the government, he said.

"You can take a big stick to the retailers and say it's all your fault – I don’t believe it is all their fault – or find ways to make it an easier place to manufacture in.

"That can be done in many ways by providing incentives for Australian manufacturers to not move offshore and not close down manufacturing operations," Davis said.

The ACCC announced last week that it will be investigating claims the supermarket duopoly uses bullying tactics to drive prices down, with 50 producers said to have come forward with evidence of misconduct.

Cattle farmers have already started speaking out about their treatment by Coles and Woolworths, with one producer claiming to have lost $80,000 in the last financial year.

The AFR reports that in its investigation, the ACCC could also consider CCA's losses, with the company bleeding millions in 2011 after a dispute over trading terms saw its leading brands taken off promotion in Woolworths between May and October.

The ACCC has given conditional backing to a legally-enforceable code of conduct for supermarket behaviour, but Davis – who also opposes the introduction of an industry ombudsman – believes what the industry needs is less regulation, not more.

Coles and Woolworths are working with the Australian Food and Grocery Council and the National Famrers Federation to develop a voluntary industry code of conduct.

 

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