Nestlé, Coca-Cola could face the music on grocery prices

Politics


“I would be more than happy to hear evidence from multinational corporations about their role in raising the price of groceries in Australia,” he said.

“It is also good to see that Coles and Woolworths have admitted that having a dominant market position can give corporations a significant advantage when it comes to negotiating contracts and prices.”

WA Labor senator Louise Pratt said the committee would seek to hear from multinationals, as well as those who could shed light on their pricing practices. “It is important for the committee to understand whether the price increases are based on actual cost increases or whether they are making additional profits at the expense of consumers.”

WA Liberal Senator Dean Smith said the inquiry needed to be “everything” to be credible.

“As multinationals are an important component of supermarket pricing structures, we expect them to appear before the inquiry,” he said. “We also note the ACCC's ongoing supermarket inquiry, which is expected to provide a comprehensive analysis of this issue in the near future.”

Woolworths' biggest 100 suppliers are responsible for more than 80 per cent of all price increases, according to the supermarket's submission to Dr Craig Emerson's review of its food and grocery code of conduct. “Must-have brands” sold by multinational giants account for more than 60% of their sales by 2023.

Nestlé and Mondelez International, which make brands such as Cadbury, Oreo, Toblerone and Philadelphia cream cheese, have told this hand they are willing to co-operate with the inquiry if called.

The multinational food producers are represented by the Australian Food and Grocery Council (AFGC), which submitted submissions on their behalf.

Tanya Barden, Chief Executive of the Australian Food and Grocery Council.Credit: Ryan Stuart

AFGC chief executive Tanya Barden, who appeared before the inquiry on Monday, said food producers of all sizes had faced the same inflation and cost pressures for the past 15 years, much before the pandemic and geopolitical tensions further exacerbated inflation and generally do not pass. on total costs to the consumer.

“There was no fat left in the system because of the previous decade, when suppliers, multinationals and nationally owned, were so tight,” Barden told this masthead.

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“In recent years, all companies have had to overcome some of the additional costs to maintain viability. I think the only difference for a multinational is that they have the option to close up shop and move overseas if they can't have a viable domestic business.”

Barden rejected suggestions that multinationals making “must-have brands” have more bargaining power with retailers.

“There is a healthy commercial tension in price negotiations all the time between all food and grocery companies and retailers with respect to the big brands. They are not using these brands to keep retailers over a barrel,” he said.

“The risk is that we end up importing more of these products and not having the jobs to make them in Australia. The retailer can say no to a price increase and they do.”

However, Australian Retailers Association chief executive Paul Zahra said many consumers are very loyal to certain brands, such as Coca-Cola or Tim Tams, and do not want to buy alternatives. He disagreed with Barden's dismissal of Woolworths' claim that multinationals are willing to withhold shares during price negotiations.

“This comes down to a play on words,” Zahra said. “If the supermarkets do not accept the price increase, they have no other option than not to buy the shares. Well, that's not a great customer outcome,” he said.

The ACCC's separate investigation into supermarket pricing practices must take a closer look at the role of multinationals in the grocery supply chain, Mr Zahra added.

“You can't do a full investigation or inquiry without having all the information … we need to see more transparency of all the factors that contribute to grocery prices.”

A spokesperson for Mondelez International said the company was proud to have long-standing relationships with customers and farmers.

A representative of Coca-Cola Europacific Partners said that the company always took into account that the products were affordable for customers and consumers.

“We have long-standing successful partnerships with our retail customers, based on conducting our business relationship in a fair and equitable manner.”

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