Woolworths attempt to buy some of
Foodland’s Australian stores as part of the break-up organised with
Metcash will be a big test for Graeme Samuel and his plods at the ACCC.

Figures suggest that Woolworths already controls 40% of the
Queensland market and 30% of WA. Woolies will no doubt trot out the
usual figures suggesting it has only a small share of the total market,
but the undisputable fact is that Woolworths and Coles control around
80% of the supermarket business in Australia and their control is being
further cemented by their growth in liquor retailing.

will take the bulk of Foodland’s Australian stores and wholesale
business, especially in Western Australia, and Woolies will snap up the
New Zealand stores and distribution business of Foodland. Metcash will
pay around $1 billion for the local assets and Woolies $2 billion for
the Kiwi assets.

The deal is likely to be announced today when
Metcash produces its 2004-2005 final profit. The company is now
Australian-owned, having bought out its South African parent as a
precursor to the Foodland deal. The New Zealand business is the
successor of the operations Coles once controlled and could not make
work in New Zealand.

This is probably the last great deal for supermarket retailers in this
country. Metcash will emerge as a true third force, and will be able to
expand its Australian Liquor Marketing arm deeper into WA. Meanwhile
the limits to growth for Coles have been exposed. It has opened its
first grog superstore in Melbourne, about eight years behind Woolies.