Coles Submission To Senate Dairy Inquiry

AUSTRALIA - Coles has lodged its submission to the Senate milk inquiry, ahead of its appearance at Committee hearings in Canberra on Tuesday 22 March.
calendar icon 16 March 2011
clock icon 2 minute read

The Senate milk enquiry is looking into the impacts of supermarket pricing on the dairy industry.

The submission says Coles’ approach to pricing is designed to give Australians a better deal on grocery pricing – something that customers, consumer groups and politicians were arguing was long overdue.

The price cuts to milk, and over 5000 other lines in the last 12 months, are part of a broader strategy to improve customer trust in Coles.

Between 2000 and 2007, Australian food price inflation increased by more than four percent per annum.

Over the past 12-18 months, rising utility bills, interest rates and other expenses have taken an estimated $150 out of the average Australian household’s monthly disposable income.

Against this backdrop, Coles has lowered prices and delivered real food price deflation in its stores of about two percent – putting an estimated $800 million to $1 billion back in customers’ pockets.

In terms of its price cuts to milk, Coles’ submission notes that:

  • The entry price for Coles’ retail milk was reduced by 4.3 percent – from $2.09 to $2.00 for two litres and the price cut was entirely funded by Coles.

  • In mid-January, Coles increased its contract prices to the milk processors and included “rise and fall’ clauses which sees Coles increase payments to processors if the farm gate milk price increases.

  • The price increase to the processors more than offsets any customer switching between branded and housebrand milk - therefore there is no reason for milk processors to reduce farm gate prices as a result of this decision.

  • To verify its pricing, Coles is willing to provide information to either the Senate committee or the ACCC on a commercial-in- confidence basis.

  • Coles has not been raising petrol prices to cross subsidise lower grocery prices.

  • Coles supports a sustainable and prosperous Australian farming and food manufacturing sector and has issued case studies to show how it is working directly with farmers to improve quality, invest in innovation and replace food imports.

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