The receiver of Rosella has said supply agreements with Coles and Woolworths played a major role in the company’s collapse.
The Gourmet Food Group fell into receivership in 2012, less than a year after the ACCC alleges Coles began its ‘Active Retail Collaboration’ program, The Sydney Morning Herald reports.
The ACCC alleges that in relation to 200 of its smaller ‘tier three’ suppliers, Coles required agreement by the supplier to the rebate within a matter of days. If these suppliers declined to agree to pay the rebate, Coles’ personnel were allegedly instructed to escalate the matter to more senior staff, and to threaten commercial consequences if the supplier did not agree.
The campaign is now part of federal court proceedings against Coles over alleged unconscionable behaviour.
Jim Sarantinos, a partner at Ferrier Hodgson, said the demand of both supermarket chains through rebates greatly contributed to Gourmet Food Group’s financial state.
''Coles and Woolworths had a target they wanted to reach in regards to private label products, which are obviously sold at a significant discount to branded products like Rosella,'' Sarantinos said.
''The problem that Rosella had was that it didn't necessarily have the financial resources to make the changes that were required to counter that move.''
Waterwheel, which was operated by the Gourmet Food Group, is one of the suppliers who were targeted for payments, according to the ACCC’s statement of claim.
A creditor’s report from 2012 says sales from Rosella's branded products fell 16 percent in 2012 ''due to retailer focus on private label products.'' The report also says that sales to major food chains were ''substantially less than budgeted'' due to major retailers ''deleting various product lines in store and delays in launching of new products and focusing on private label products.”
Sarantinos said ''The push from the supermarkets towards private labels and the negotiating power they are able to exert on suppliers certainly had an impact on Rosella's performance.''
''There were still issues in Rosella's business, and it may have been that receivership was inevitable, but [the push by the supermarkets] was certainly a big factor.''
Parts of the Gourmet Food Group’s business have since been sold off. In February last year, Waterwheel Industries was sold to Australian food manufacturer, Green's General Foods. In March 2013, Pitango was purchased by Sydney-based Beak and Johnston.
Rosella was then acquired in April 2013 by Sabrands, with manufacturing at Sabrands’ Yarra Ranges plant. Rosella’s tomato sauce is back in Coles, Woolworths and IGA supermarkets.