The war of National Brand vs Private brand has risen to new level this week when Australian industry Minister Kim Carr launched a stinging attack on grocers plans to increase their market share of Private brand products.
He said the move would restrict consumer choice and hurt suppliers.
Senator Carr also said there was ”serious cause for concern about an abuse of market power” by Woolworths and Coles in their dealings with food manufacturers, and referred industry complaints to the competition watchdog.
As Woolworths said yesterday it aimed to double its share of private-label or “house brand” products, Senator Carr backed local manufacturers’ concerns about the sector’s rapid growth.
”We will be told that this is all about consumer rights,” he said. ”It’s not. It’s about supermarket profits.”
Private Brands are estimated to account for up to 20% of all supermarket sales, and food manufacturers fear further growth will squeeze margins on branded products.
Senator Carr said the push for more private-label products threatened to ”kill any incentive to innovate” among supplier firms.
”Margins are simply too thin to sustain a manufacturing plant on house-brands alone,” he said. The comments represent the latest salvo in the growing feud over Coles’s and Woolworths’s plans to increase the market share of their own brands. Senator Carr conceded he was not ”judge and jury” in the dispute, but said suppliers had privately complained about supermarket misconduct for fear of speaking out publicly against their biggest buyers.
The complaints alleged the supermarkets had exploited their power through tactics such as demanding hefty concessions and using home-brands to ”destroy” suppliers’ intellectual property.
Senator Carr has passed the complaints to the Australian Competition and Consumer Commission, which is investigating the growth of private labels.
He made the comments to members of the Australian Food and Grocery Council, which yesterday released a commissioned report claiming the share of private-label products would reach up to 50 per cent by 2020, threatening local jobs.
Coles released its own research showing private-label products helped domestic manufacturers achieve the scale they needed to remain viable.
The Construction, Forestry, Mining and Energy Union, which has campaigned against Woolworths home brand tissues, added to industry calls for the Labor Party to look at supermarket power.
”Too many manufacturing jobs have already been lost across Australia due to the predatory practices of the supermarket duopoly,” national secretary Michael O’Connor said.
Source: The Sydney Morning Herald