Suppliers refer Coles, Woolies to ACCC
Squeezed out ... branded goods are suffering in the supermarket wars.
Suppliers to Australia's two dominant supermarket chains have complained to the consumer watchdog about ''unconscionable conduct'' by Coles and Woolworths.
The chairman of the Australian Competition and Consumer Commission, Rod Sims, told the Herald yesterday the commission had had ''approaches from suppliers relating to allegations about the behaviour of the supermarkets''.
Food suppliers have been hit badly by the price wars between Coles and Woolworths which in the past year have slashed the costs of fresh produce, milk, bread, toilet paper and washing powder.
Mr Sims confirmed that big listed companies were among the suppliers.
Last month he vowed to protect any supplier who came forward with information about bullying tactics from the big supermarket chains, which control more than 70 per cent of spending on groceries.
''We put out a call for any information. We have had some suppliers and companies approach us with information, and we are encouraged by the response so far,'' he said yesterday.
Primary among the complaints is the suggestion that the supermarkets ask suppliers to increase output to meet demand. After suppliers have committed capital to achieve this, they are asked to reduce their price.
In a speech in Melbourne last month, Mr Sims urged suppliers to provide evidence of ''unconscionable conduct'' by the two supermarket majors that could be used in a prosecution.
He said at the time that an inquiry in 2008 into retail grocery costs did ''not support the proposition that retail prices have risen while farm-gate prices have stagnated or declined''.
Since then, supermarkets have increased their use of generic-label foods and been accused of squeezing out branded goods and cutting producers' margins.
Mr Sims said the issues the commission was focusing on were allegations that had come about only in the past six to nine months.
Last year Woolworths announced plans to double sales of its brands over the next five years.
Analysts from Goldman Sachs
estimate this will shift about $4.5 billion worth of sales from household brands to the supermarket's own labels.
Australia's liquor and wine industries are the latest to feel the squeeze. On Friday Woolworths reported that its house alcohol sales were now equivalent to those of the second largest supplier by value and had helped to push up overall liquor sales by about 13 per cent in the December half year to $3.6 billion.
Woolworths sells its own brand beer, wine and spirits, either through subsidiaries or through outside suppliers.
Last year, private label wines were the biggest growth area in Woolworths' liquor business.
The company launched 100 new alcohol brands in the December half year, including ginger beer, ciders, rum and premium bourbon.