Woolies and Coles just too powerful

Neil Wilson
Herald Sun
March 28, 2012

THE chairman of Australia’s biggest independent brewer has called for a regulatory revolution to rein in the power of the supermarket duopoly and protect local ownership of farmlands.

Coopers chairman Glenn Cooper wants new laws to help producers, starting with minimum floorspace quotas for local products in supermarkets.

“I don’t mind raising the word protection,” Mr Cooper said, speaking to BusinessDaily in his role as deputy chair of the Australian Made, Australian Grown Campaign group.

“I think Australia should protect its clean, green reputation for food.”

He also said Woolworths’ and Coles’ power over the supply chain had grown too great, and the supermarkets needed shackles common in many other nations in the G20 – the Group of 20 leading economies.

“I think it’s really a problem when you have essential services like provision of food and petrol dominated by just two players – that’s a real concern for the future.

“In England, they talk about the big supermarket chains like Tesco and those large players but there are five of them.
”That’s a lot different to two.

“There should be a set level of the market which cannot be exceeded.

”That’s the position in many western countries including the US.”

He said the retailers were using their dominance to pressure distributors and farm producers to accept lower prices, as had occurred in the milk industry.

This threatened to crush the viability of the domestic food industry, which would eventually cost consumers.

Coles and Woolworths have consistently defended themselves against accusations that they have treated suppliers poorly and say they have a good relationship with producers.

In the past five years, the value of imported foods, mainly used in processed products, has risen 34 per cent.

The Federal Government’s Foodmap report, released last month, reveals Coles and Woolworths account for 63 per cent of food spending in Australia.

It says their efforts to cut costs is likely to increase the trend towards food imports.

“Politicians say stopping (the rise in imports) is protectionism which they cannot have, but look at the world, the US grain subsidies – if that’s not protection, what is,” Mr Cooper said.

Products such as juice should be required to have a minimum level of Australian content, Mr Cooper said.

In a more radical push, he wants at least 30 per cent of supermarket floorspace set aside for Australian-made goods – in dedicated aisles.

Mr Cooper is a fifth generation member of the family behind the Coopers Brewery and marketing director for the company, which commands 4 per cent of the nation’s beer market.

Coopers is now the biggest Australian brewer after Melbourne-based Foster’s was bought last year by Anglo-African beverage giant SABMiller.

Mr Cooper said his concern about the dominance of Woolworths and Coles was not directly related to Coopers’ supermarket sales.

But he hit out at supermarkets promoting their generic beer brands, which boast 2.5 per cent of the market, by leveraging off the mainstream products of established brewers.

He was particularly critical at retailers introducing generics – such as Woolworths’ Platinum Blonde – with similar branding to established labels, such as Foster’s Pure Blonde.

“People spend a lot of money investing in building brands over many years,” Mr Cooper said.

“To be able to come in and lift off that brand-building exercise is not the way the game should be played in Australia.”
Last year, when the tussle between producer and retailer spilled from foods to alcohol, Foster’s pulled products from Woolworths’ shelves after the retailer discounted the brands heavily.

Mr Cooper said the number of Coles and Woolworths outlets – put at 2300 in the Foodmap report – made it tougher for new entrants to compete on price.

He also added his voice to concern over the Foreign Investment Review Board’s national interest test on farm ownership.
The test is only applied to deals worth at least $231 million, allowing large numbers of farm buy-ups by foreign companies to go unscrutinised.

The proportion of farmland fully or partly owned by foreigners has nearly doubled to 11.3 per cent in the past 26 years, according to the Bureau of Agricultural and Resource Economics and Sciences.

The Senate Rural Affairs Committee is holding an inquiry into the Foreign Investment Review Board’s national interest test.
Mr Cooper urged better monitoring and enforcement.

“The world will be needing increasing amounts of food.

”That land will help produce it, but I wonder what benefit Australians will receive from that.”