Business

Coles denies pushing generic milk

COLES has denied claims it is using shelf space in its supermarkets to push its home-brand milk ahead of branded products.

A Senate committee investigating Australia's food processing sector on Tuesday heard from the supermarket giant as part of a wider hearing into the industry.

Committee chairman Senator Richard Colbeck asked why when he went to buy milk that the shelf space was clearly dominated by Coles home brand products.

Senator Colbeck said if he wanted branded milk - processed by brands not owned by the supermarket - he had to specifically ask staff, and it was often "out the back".

Coles merchandise director John Durkan told the inquiry Coles had no plans to grow its home brand product range, except in line with overall sales.

But Mr Durkan said "consumer choice" had driven double-figure growth of the company's home brand milk since it started a milk price war with its main competitor, Woolworths, in January last year.

He said the increase in shelf space dedicated to Coles milk was a result of customers buying the generic brand.

But he denied Coles was trying to push branded products out of the market.

"We build up all house brands as part of our strategy to grow all our sales," he said.

"Our aim has always been to look after our farmers, and in general farm gate prices have increased since then (milk price war)."

The committee asked whether Coles had ever retrospectively informed suppliers of changes to the retail sale price of their products, forcing producers to accept new prices.

Mr Durkan said that the company had policies against such practices, and in his time, he had never heard of such action being undertaken within the company.

But he said prices were negotiated on a day-to-day and week-by-week basis, but the huge retailer never used its market influence to force suppliers to take prices without first negotiating.

Senator Colbeck said food producers and processors had come to the committee complaining that trading terms (price negotiations) were being used to transfer risk from the supermarket back on to suppliers, especially when negotiating sale prices on individual products.

Mr Durkan said negotiations were not used to manipulate supply volumes, but simply to change prices "according to the market".

"Operationally, there are no retrospective price changes - the only way we can changes prices is through negotiations in advance."

The inquiry will report to parliament on June 30.

Topics:  coles milk senate inquiry



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