Is there anyone Australia’s notoriously brutal supermarket giants won’t do over?

Adele Ferguson’s page one scoop in The Age today revealing that Foster’s withheld beer supplies to Coles and Woolworths earlier this month is the latest example of a suppliers pushing back against the world’s most dominant supermarket duopoly.

Shafting farmers and milk producers is one thing, but tackling the biggest Australian-based and owned branded goods supplier is something else.

Foster’s is a $10.6 billion giant that still has a majority of the Australian beer market and VB remains the No.1 seller, albeit well below its peak market share of more than 25% in the 1990s.

It is not often that the Australian directors club so openly brawls in this way. Here you have the David Crawford-chaired Foster’s going to war with the Michael Chaney-chaired Wesfarmers and the James Strong-chaired Woolworths.

It is noteworthy that Max Ould, a former managing director of milk giant National Foods, is a Foster’s director. He clearly sees the danger and supports a more robust response from the beer industry than what the milk suppliers did when they came under attack from brand destroying discounting.

While suppliers have long bemoaned the dominance of Coles and Woolworths since the fall of Franklins in 2003, the Australian public is becoming increasingly hostile to Big Retail more generally. Witness the huge backlash against Gerry Harvey, Myer and Solomon Lew earlier this year when they argued for a new online shopping tax impost.

In another example of corporate thuggery, Manningham City Council has been quite shocked at the aggressive approach Woolworths has taken to prevent an Aldi supermarket opening at Jackson Court in Doncaster.

Woolworths caused outraged in the local community when it closed the Jackson Court Safeway supermarket in 2008 and converted it into a giant Dan Murphy’s liquor outlet.

The loss of the supermarket adversely affected trade at the centre and, responding to numerous requests from traders and local residents, Manningham  attempted to resolve the problem by offering its car park land to an alternative supermarket operator.

After Aldi was selected as the preferred applicant in 2009, Woolworths initiated proceedings in VCAT and then issued this writ in the Victorian Supreme Court attempting to prevent council from proceeding with its plans.

Manningham has filed this defence and believes the Woolworths claims have little merit.

Woolies CEO Michael Luscombe made the following comments about this matter at the company’s 2010 AGM in Brisbane last November:

“We don’t actually have a problem with the Aldi supermarket opening near the Dan Murphy …

“What we have a problem with is this very small car park, and this was one of the reasons why the supermarket was not all that successful, and that car park had been, by trust, given over to car parking in perpetuity, and to build that supermarket, would take away all of the parking — not just for our Dan Murphy store, but also for all the shopkeepers …

If a space for Aldi can be found without reducing the car park, then that would be great for that shopping centre[1].

In addition, Woolworths was quoted as follows in the local paper in July 2009:

“Woolworths spokesman Benedict Brook told the Manningham Leader last week that the addition of a grocery store alongside the company’s new Dan Murphy’s would bring in more customers and ensure the future viability of a much-liked neighbourhood shopping centre.”[2]

So here you have Woolworths abandoning a community and then publicly claiming to be relaxed about Aldi filling the void.

Yet then they turn around and hire a QC to produce this extraordinary writ, which, if successful, would create a dangerous legal precedent. It looks like blatant gaming of the planning and legal system to suppress a competitor.

Customer traffic into the Dan Murphy’s at Jackson Court is dramatically reduced from what the old supermarket used to produce and the car parking issue is a furphy because Manningham will require Aldi to deliver appropriate decked parking to actually increase the overall level of parking capacity at Jackson Court.

Relations between Woolworths, Manningham and the local community are pretty toxic at the moment with many residents refusing to shop at Dan Murphy’s, but who would have thought that the company’s behaviour would even lead its biggest beer supplier to decline deliveries for a few days in protest after also being treated appallingly.

*Disclosure: Stephen Mayne is a Manningham City councillor who was not paid for this contribution.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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