Wine boss fires parting shot at big twoo's retail 'mafia'

Jun 14, 2012

COLES and Woolworths have been accused of blacklisting local suppliers who publicly criticise aggressive price discounts by the big supermarkets and their rapid expansion into home-brand products.

The departing chief executive of the Winemakers Federation of Australia, Stephen Strachan, said the supermarket giants had used their market dominance to create a culture of fear and intimidation among local wine producers.

''If you're an individual company that speaks out against them or says anything publicly that criticises their tactics, they would have no hesitation in giving you a holiday from their shelves,'' Mr Strachan said.

He said the bullying was not confined to Australian winemakers.

''It's happening in every area of food and beverage you'd care to mention,'' he said.

Mr Strachan would speak to The Sunday Age only after ending his role with the Winemakers Federation on Friday, amid claims that Coles and Woolworths had previously tried to undermine his position within the organisation.

''Whenever I've made comments in the press, I could only talk about retailers in a generic sense, but they would religiously follow up on those comments and make it known they were displeased,'' Mr Strachan said.

Senator Nick Xenophon, a member of a federal parliamentary inquiry into the food processing industry, said an effective supermarket duopoly meant businesses with complaints about Coles and Woolworths were fearful of publicly airing them.

He said the Senate committee would probably have had more luck trying to get people to speak out about the Mafia in Sicily 50 years ago.

''This is an inevitable consequence of having two players with so much market share,'' Senator Xenophon said.

A Coles spokesman, Jim Cooper, rejected the claims. He said retailers could not be blamed for the national wine glut, which was the biggest issue facing Australia's embattled wine industry.

"We've been disappointed that the Winemakers Federation has chosen to attack wine retailers, rather than acknowledge the countless instances where they have collaborated with winemakers to help them sell their excess volumes,'' Mr Cooper said.

But allegations that big retailers were abusing market power were backed by Kate Carnell, who stepped down as the head of the Australian Food and Grocery Council in March.

''There have been lots of small suppliers who have been delisted for a variety of reasons,'' she said. ''There is such market dominance it's impossible to have anything like a level playing field, at a time when both companies are expanding their home-brand labels.''

Last year, Woolworths chief executive Grant O'Brien flagged that the nation's biggest supermarket chain would double its offering of home-brand products to eventually represent about a third of total sales.

Coles has adopted a similar strategy, which has intensified competition for shelf space and reduced margins for some local suppliers.

The Sunday Age contacted 12 food and wine producers, who all declined to speak on the record. ''I can't afford to say anything that will get them off-side,'' one said.

Coles urged The Sunday Age to contact Steve Grimeley, of Loom Wine, who said his family business in McLaren Vale had always enjoyed a strong relationship with the retailer.

''I don't want to get involved in a high-profile slanging match, but from a global perspective, it's a bit unfair to single out Coles and Woolworths for criticism,'' Mr Grimeley said.

Woolworths did not respond to questions before deadline.