Rising energy costs will force the food giant Woolworths to hike its grocery prices, its CEO has warned.
Speaking at a business forum in Melbourne, Brad Banducci said the company’s $360 million energy bill was increasing as the company placed a higher priority on its health foods.
“We manage what we can manage with energy efficiency,” Banducci was quoted in an AFR report. “But given the cost increases that are coming through right now, we are trying to outrun a bear, but I am not sure we can.
“We will have to in some way, very cautiously and carefully, pass those through to our customers, unfortunately.”
“We are doing a lot of work on at the moment, and I just don’t know the answer right now. But it is a concern. It’s just a question of timing.”
A price hike due to energy cost would effectively end a long run of falling grocery prices in Australia, the report explained.
While research showed 60 per cent of shoppers want to buy healthier food, it tends to be fresher and requires chilling while organic foods are double the average cost of alternative products.
Banducci claimed that with a greater emphasis on healthier products, increased energy prices would eventually outweigh the company’s savings.
“We do need to make these products affordable,” Banducci continued, although he also added that, despite the high prices, increasing the number of “good for you” products had demonstrated a drive in sales.
“What we’ve been trying to address is that customers need products that are affordable and they need trust on price,” he said. “You are not seeing a profit shift from one side of the supply chain to the other.”