Wesfarmers chief executive Richard Goyder has lashed out at calls by the nation’s peak body representing food manufacturers and suppliers for the creation of a supermarket ombudsman, saying the idea was ‘‘a joke’’ and that suppliers had themselves to blame for underinvesting in their businesses.
Speaking at a press conference for the first-half profit result of Wesfarmers and its Coles supermarket division, Mr Goyder defended the price war it has sparked with rival Woolworths over the last year and said the real concentration of power laid not with supermarkets but the manufacturers.
‘‘If you look at the market shares of some suppliers they have 70 and 80 per cent market share, Coles has something in the 20s, and if you want to look at market share and market concentration they should look at some of the suppliers who are part of that organisation.’’
Advertisemen t: Story continues below Mr Goyder was responding to renewed calls from the Australian Food and Grocery Council (AFGC) for the creation of a supermarkets ombudsman to enforce a fair trading code of conduct.
It follows persistent complaints from suppliers who have claimed the price war between Woolworths and Coles is eating into their own profits, making their businesses uneconomic and threatening the wider future of the nation’s food manufacturing industry.
‘‘The call from the AFGC for an ombudsman is frankly a joke,’’ Mr Goyder said this afternoon.
He also blamed manufacturers for underinvesting in their own brands and factories.
‘‘I’ve never seen any business or industry ombudsman that would do anything but detract value from the sector and so I think it’s a joke, and it’s from people who haven’t invested enough in their own brands and haven't invested enough in their own production capabilities to provide customers with what they want.’’
Last year Coles slashed the price of milk and moved to push down prices across a range of foods, with Woolworths forced to match the slashed prices in most instances. The AFGC has led the charge against the supermarkets, claiming their market power was squeezing manufacturers.
Both supermarkets have also greatly increased their stock of home brand goods, taking up shelf space traditionally used by branded suppliers.
Earlier this morning bread and spreads maker Goodman Fielder posted a 77 per cent drop in net profit, blaming among other things heavy discounting and home-brand resurgence by the supermarkets.
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