1 00:00:00,020 --> 00:00:02,060 (THEME MUSIC PLAYS) 2 00:00:14,060 --> 00:00:15,580 CUSTOMER: Have a go at this. 3 00:00:15,580 --> 00:00:15,820 It's one of the smaller trolleys CUSTOMER: Have a go at this. 4 00:00:15,820 --> 00:00:17,540 It's one of the smaller trolleys too. 5 00:00:17,540 --> 00:00:17,780 It's one of the smaller trolleys too. This just cost me almost $400. 6 00:00:17,780 --> 00:00:21,180 This just cost me almost $400. 7 00:00:21,180 --> 00:00:22,780 This is absolute joke. 8 00:00:24,300 --> 00:00:29,700 ANGUS GRIGG: Coles and Woolworths - Australia's big two under fire. 9 00:00:30,660 --> 00:00:34,020 There's no doubt we are paying higher prices than we should. 10 00:00:35,460 --> 00:00:37,180 They've just become bigger and bigger. 11 00:00:38,420 --> 00:00:41,220 MICHAEL CUNIAL: It's like they've got their hand on your throat 12 00:00:41,220 --> 00:00:41,460 MICHAEL CUNIAL: It's like they've and JUST letting you breathe. 13 00:00:41,460 --> 00:00:43,300 and JUST letting you breathe. 14 00:00:44,540 --> 00:00:47,460 Insiders are speaking out. 15 00:00:47,460 --> 00:00:49,940 INDUSTRY INSIDER: If you're not willing to play their game, 16 00:00:49,940 --> 00:00:50,180 INDUSTRY INSIDER: If you're not it's a lot of intimidation. 17 00:00:50,180 --> 00:00:52,140 it's a lot of intimidation. 18 00:00:52,140 --> 00:00:52,380 So, how would you categorise it's a lot of intimidation. 19 00:00:52,380 --> 00:00:54,020 So, how would you categorise a special? 20 00:00:54,020 --> 00:00:54,260 So, how would you categorise Oh...a little bit like a drug. 21 00:00:54,260 --> 00:00:56,780 Oh...a little bit like a drug. 22 00:00:57,740 --> 00:01:01,300 Their million-dollar CEOs on the defensive. 23 00:01:01,300 --> 00:01:04,180 He says that's the definition of price gouging. 24 00:01:05,340 --> 00:01:06,820 I think I'm done, guys. 25 00:01:06,820 --> 00:01:08,860 Uh...no... You're walking out? Really? 26 00:01:13,340 --> 00:01:14,820 Successive Australian governments 27 00:01:14,820 --> 00:01:18,460 have allowed Coles and Woolworths to increase their market power. 28 00:01:18,460 --> 00:01:18,740 Now we expose the tactics they use to keep prices high and competitors out. have allowed Coles and Woolworths to increase their market power. 29 00:01:18,740 --> 00:01:24,580 Now we expose the tactics they use to keep prices high and competitors out. 30 00:01:25,940 --> 00:01:28,500 First it was the farmers who felt the pinch... 31 00:01:28,500 --> 00:01:31,020 PROTESTER: What do we want?! ..then supermarket workers... 32 00:01:31,020 --> 00:01:32,180 PROTESTERS: Now! 33 00:01:32,180 --> 00:01:34,420 ..and finally it's you, the consumer, 34 00:01:34,420 --> 00:01:38,140 being squeezed by this powerful duopoly. 35 00:01:57,380 --> 00:02:00,540 From the city to the suburbs, 36 00:02:00,540 --> 00:02:02,460 in country towns, 37 00:02:02,460 --> 00:02:05,500 they are part of our landscape - 38 00:02:05,500 --> 00:02:08,140 Coles and Woolworths. 39 00:02:09,420 --> 00:02:12,420 We're told they are the 'fresh food people', 40 00:02:12,420 --> 00:02:12,660 We're told the 'home of everyday low prices'. 41 00:02:12,660 --> 00:02:14,540 the 'home of everyday low prices'. 42 00:02:14,540 --> 00:02:15,540 VOICEOVER: Teenagers... 43 00:02:15,540 --> 00:02:15,780 They are family dinners VOICEOVER: Teenagers... 44 00:02:15,780 --> 00:02:18,380 They are family dinners and back-to-school snacks. 45 00:02:18,380 --> 00:02:18,620 They are family dinners ..eating machines. 46 00:02:18,620 --> 00:02:19,420 ..eating machines. 47 00:02:19,420 --> 00:02:21,060 Our most trusted brands, 48 00:02:21,060 --> 00:02:22,620 who have always sold themselves 49 00:02:22,620 --> 00:02:22,860 as being firmly who have always sold themselves 50 00:02:22,860 --> 00:02:25,460 as being firmly on the consumer's side. 51 00:02:25,460 --> 00:02:25,700 as being firmly Value the Australian way. 52 00:02:25,700 --> 00:02:27,740 Value the Australian way. 53 00:02:27,740 --> 00:02:30,980 But over the last year this narrative has fractured, 54 00:02:30,980 --> 00:02:31,220 But over the last year and consumers are angry. 55 00:02:31,220 --> 00:02:34,180 and consumers are angry. 56 00:02:34,180 --> 00:02:34,420 CUSTOMER: and consumers are angry. 57 00:02:34,420 --> 00:02:37,700 CUSTOMER: Two packets of chips for $11. 58 00:02:37,700 --> 00:02:37,940 CUSTOMER: I thought, "Maybe it's wrong." 59 00:02:37,940 --> 00:02:39,580 I thought, "Maybe it's wrong." 60 00:02:39,580 --> 00:02:44,100 I just spent $46 on making a lasagne, like, lasagne ingredients, 61 00:02:44,100 --> 00:02:46,180 and I already had fucking half the ingredients. 62 00:02:46,180 --> 00:02:49,180 CUSTOMER: Half price. "Was $19." 63 00:02:49,180 --> 00:02:51,580 No, it wasn't. $16.10. 64 00:02:51,580 --> 00:02:53,780 You absolute arseholes. 65 00:02:59,540 --> 00:03:04,180 The Australian supermarket sector is stunningly concentrated. 66 00:03:04,180 --> 00:03:04,460 When you get this much concentration, The Australian supermarket sector is stunningly concentrated. 67 00:03:04,460 --> 00:03:05,780 When you get this much concentration, 68 00:03:05,780 --> 00:03:06,020 When you get you're going to get higher prices. 69 00:03:06,020 --> 00:03:07,260 you're going to get higher prices. 70 00:03:07,260 --> 00:03:07,500 It's just a straight causal you're going to get higher prices. 71 00:03:07,500 --> 00:03:11,780 It's just a straight causal relationship proved everywhere. 72 00:03:11,780 --> 00:03:13,820 So, I think that's quite clear. 73 00:03:16,020 --> 00:03:21,300 As head of the ACCC, Rod Sims spent 11 years battling the big two. 74 00:03:21,300 --> 00:03:22,540 Competition policy 75 00:03:22,540 --> 00:03:25,820 is a bit like trying to walk up the down escalator. 76 00:03:25,820 --> 00:03:28,740 If you're not really moving forward and pressing ahead, 77 00:03:28,740 --> 00:03:28,980 If you're not really moving forward you're going to go backwards. 78 00:03:28,980 --> 00:03:30,220 you're going to go backwards. 79 00:03:30,220 --> 00:03:30,460 And we stopped moving ahead you're going to go backwards. 80 00:03:30,460 --> 00:03:33,860 And we stopped moving ahead 20-odd years ago. 81 00:03:35,100 --> 00:03:37,300 It wasn't always this way. 82 00:03:39,460 --> 00:03:43,540 Coles and Woolworths started out as variety stores. 83 00:03:43,540 --> 00:03:43,780 Coles and Woolworths In the late 1950s, 84 00:03:43,780 --> 00:03:45,460 In the late 1950s, 85 00:03:45,460 --> 00:03:48,060 when they moved into groceries and fresh produce, 86 00:03:48,060 --> 00:03:52,500 there were 21 other retailers vying for customer dollars, 87 00:03:52,500 --> 00:03:54,420 but within just a few years, 88 00:03:54,420 --> 00:03:56,900 with their new self-serve supermarket model, 89 00:03:56,900 --> 00:03:59,340 they had cornered around 20% of the market. 90 00:03:59,340 --> 00:03:59,580 they had cornered And this concentration 91 00:03:59,580 --> 00:04:00,820 And this concentration 92 00:04:00,820 --> 00:04:01,060 already had suppliers, And this concentration 93 00:04:01,060 --> 00:04:04,380 already had suppliers, especially farmers, worried. 94 00:04:05,340 --> 00:04:07,580 ARCHIVE REPORTER: Some of them, of course, are very frightened 95 00:04:07,580 --> 00:04:09,620 that this is being done at the cost of their independence, 96 00:04:09,620 --> 00:04:09,900 that you, in fact, will tell them what to grow and when and how. that this is being done at the cost of their independence, 97 00:04:09,900 --> 00:04:12,380 that you, in fact, will tell them what to grow and when and how. 98 00:04:12,380 --> 00:04:12,620 that you, in fact, will tell them No, that is certainly not the case. 99 00:04:12,620 --> 00:04:14,020 No, that is certainly not the case. 100 00:04:14,020 --> 00:04:15,940 The grower is completely independent. 101 00:04:15,940 --> 00:04:18,500 He is able to deal with us if he chooses and if it suits him. 102 00:04:18,500 --> 00:04:18,780 He is able to deal with us if he chooses and if it suits him. On the other hand, if you're the only people to deal with, 103 00:04:18,780 --> 00:04:20,540 On the other hand, if you're the only people to deal with, 104 00:04:20,540 --> 00:04:20,780 On the other hand, if you're he hasn't got much choice, has he? 105 00:04:20,780 --> 00:04:22,020 he hasn't got much choice, has he? 106 00:04:22,020 --> 00:04:23,580 No, that would be true, 107 00:04:23,580 --> 00:04:24,740 but it is most unlikely 108 00:04:24,740 --> 00:04:26,820 that we will ever be the only people to deal with. 109 00:04:34,060 --> 00:04:35,700 By the late 1970s 110 00:04:35,700 --> 00:04:35,940 Coles's and Woolworths's market share By the late 1970s 111 00:04:35,940 --> 00:04:40,220 Coles's and Woolworths's market share had doubled to nearly 40%, 112 00:04:40,220 --> 00:04:44,820 with a rise in shopping malls built around a central supermarket. 113 00:04:45,780 --> 00:04:47,180 Most of this market share 114 00:04:47,180 --> 00:04:47,420 was acquired even before Most of this market share 115 00:04:47,420 --> 00:04:51,700 was acquired even before Australia had competition laws. 116 00:04:53,300 --> 00:04:55,700 They went on to buy out competitors 117 00:04:55,700 --> 00:05:00,780 like Bi-Lo, Safeway, Action and dozens of Franklins stores. 118 00:05:02,220 --> 00:05:03,940 As the new millennium approached, 119 00:05:03,940 --> 00:05:08,020 they'd cemented their position as the purveyors of convenience. 120 00:05:08,020 --> 00:05:08,260 they'd cemented their position A duopoly was born. 121 00:05:08,260 --> 00:05:10,500 A duopoly was born. 122 00:05:12,660 --> 00:05:14,460 We have allowed 123 00:05:14,460 --> 00:05:14,660 these corporations We have allowed 124 00:05:14,660 --> 00:05:15,620 these corporations 125 00:05:15,620 --> 00:05:17,140 turned a blind eye, 126 00:05:17,140 --> 00:05:19,020 over a very long period of time, 127 00:05:19,020 --> 00:05:21,940 almost like boiling the frog over a very long time, 128 00:05:21,940 --> 00:05:22,220 almost like boiling the frog over a very long time, that they've just become bigger and bigger. 129 00:05:22,220 --> 00:05:23,940 that they've just become bigger and bigger. 130 00:05:26,740 --> 00:05:28,700 Coles and Woolworths now control 131 00:05:28,700 --> 00:05:31,580 65% of the grocery market. 132 00:05:31,580 --> 00:05:34,580 Aldi has just 10%, 133 00:05:34,580 --> 00:05:36,260 with independents like IGA 134 00:05:36,260 --> 00:05:37,780 making up the rest. 135 00:05:38,740 --> 00:05:43,580 That means, on average, for every $10 Australians pay for groceries, 136 00:05:43,580 --> 00:05:47,660 $6.50 of that is spent at Coles and Woolworths 137 00:05:47,660 --> 00:05:47,900 $6.50 of that and just $1 at Aldi. 138 00:05:47,900 --> 00:05:50,700 and just $1 at Aldi. 139 00:05:50,700 --> 00:05:53,820 By contrast, in the UK, 140 00:05:53,820 --> 00:05:59,140 there are five major players vying for a cut of that $10, 141 00:05:59,140 --> 00:06:04,180 and in the US there are multiple supermarket chains in the mix. 142 00:06:04,180 --> 00:06:10,260 Together Coles and Woolworths have almost 2,000 stores across Australia, 143 00:06:10,260 --> 00:06:10,500 Together Coles and Woolworths have generating $84 billion in revenue. 144 00:06:10,500 --> 00:06:14,420 generating $84 billion in revenue. 145 00:06:15,380 --> 00:06:19,300 This market power has led to accusations of profiteering, 146 00:06:19,300 --> 00:06:23,060 exploiting suppliers and taking advantage of consumers 147 00:06:23,060 --> 00:06:26,260 at a time when the cost of living is spiralling. 148 00:06:26,260 --> 00:06:26,500 at a time when the cost of living NEWSREADER: As prices rise 149 00:06:26,500 --> 00:06:27,940 NEWSREADER: As prices rise 150 00:06:27,940 --> 00:06:28,180 the big two supermarkets NEWSREADER: As prices rise 151 00:06:28,180 --> 00:06:31,220 the big two supermarkets have revealed record profits. 152 00:06:31,220 --> 00:06:33,740 NEWSREADER: Coles and Woolworths both reported profits 153 00:06:33,740 --> 00:06:35,740 of more than $1 billion this year 154 00:06:35,740 --> 00:06:38,740 and increased their gross profit margins. 155 00:06:38,740 --> 00:06:40,620 After years of inaction 156 00:06:40,620 --> 00:06:45,900 politicians from all sides are now talking about taking on the duopoly. 157 00:06:45,900 --> 00:06:47,780 When you have this much market power, 158 00:06:47,780 --> 00:06:49,860 you need a big stick over the top of them, 159 00:06:49,860 --> 00:06:50,780 and it's time now. 160 00:06:50,780 --> 00:06:52,540 How're you going, mate? Welcome back. 161 00:06:54,100 --> 00:06:58,500 There are six inquiries and reviews targeting the duopoly. 162 00:06:58,500 --> 00:06:58,780 Today I announced that the treasurer will be directing the ACCC There are six inquiries and reviews targeting the duopoly. 163 00:06:58,780 --> 00:07:02,820 Today I announced that the treasurer will be directing the ACCC 164 00:07:02,820 --> 00:07:03,060 Today I announced that the treasurer to conduct a 12-month price inquiry 165 00:07:03,060 --> 00:07:05,740 to conduct a 12-month price inquiry 166 00:07:05,740 --> 00:07:05,940 to conduct a 12-month price inquiry into the supermarket industry. 167 00:07:05,940 --> 00:07:08,180 into the supermarket industry. 168 00:07:08,180 --> 00:07:09,860 It is time that... 169 00:07:09,860 --> 00:07:12,980 Greens Senator Nick McKim is leading a Senate inquiry 170 00:07:12,980 --> 00:07:13,220 Greens Senator Nick McKim into supermarket pricing. 171 00:07:13,220 --> 00:07:14,540 into supermarket pricing. 172 00:07:14,540 --> 00:07:17,660 And it's time that we hauled the CEOs in 173 00:07:17,660 --> 00:07:19,900 and ensured that those CEOs 174 00:07:19,900 --> 00:07:23,500 are called to account for their pricing practices. 175 00:07:23,500 --> 00:07:23,740 are called to account Just watch your head there, Leah. 176 00:07:23,740 --> 00:07:25,620 Just watch your head there, Leah. 177 00:07:26,580 --> 00:07:29,060 The CEOs are quick to argue 178 00:07:29,060 --> 00:07:32,340 they're not profiteering at the expense of customers. 179 00:07:34,820 --> 00:07:36,860 Do you think your profits are excessive? 180 00:07:36,860 --> 00:07:37,140 No, I think they are fair in the context of the investment Do you think your profits are excessive? 181 00:07:37,140 --> 00:07:42,460 No, I think they are fair in the context of the investment 182 00:07:42,460 --> 00:07:44,980 that goes into the business every year 183 00:07:44,980 --> 00:07:47,460 and the performance of our team. 184 00:07:47,460 --> 00:07:49,980 When you look at our return on investment, 185 00:07:49,980 --> 00:07:51,460 it's sort of in the middle of the ASX. 186 00:07:51,460 --> 00:07:56,780 So, you know, is the question did we drive profit by jacking up prices? 187 00:07:56,780 --> 00:07:57,020 So, you know, is the question did we The answer is no. 188 00:07:57,020 --> 00:07:58,540 The answer is no. 189 00:07:58,540 --> 00:07:58,780 It's really important that businesses like Coles The answer is no. 190 00:07:58,780 --> 00:08:02,820 It's really important that businesses like Coles 191 00:08:02,820 --> 00:08:05,380 are profitable enterprises. 192 00:08:05,380 --> 00:08:05,580 are profitable enterprises. We employ over 120,000 team members, 193 00:08:05,580 --> 00:08:09,100 We employ over 120,000 team members, 194 00:08:09,100 --> 00:08:12,540 we support over 8,000 suppliers, 195 00:08:12,540 --> 00:08:16,260 and we also need to invest in the business 196 00:08:16,260 --> 00:08:18,980 to keep it growing over time. 197 00:08:18,980 --> 00:08:23,420 (TRAFFIC DRONES) 198 00:08:23,420 --> 00:08:25,100 ROD SIMS: The evidence over time 199 00:08:25,100 --> 00:08:26,580 is that Coles and Woolworths 200 00:08:26,580 --> 00:08:26,820 had some of the highest margins is that Coles and Woolworths 201 00:08:26,820 --> 00:08:31,500 had some of the highest margins in the world for supermarkets. 202 00:08:31,500 --> 00:08:31,780 Historically, they've been very profitable supermarkets had some of the highest margins in the world for supermarkets. 203 00:08:31,780 --> 00:08:35,660 Historically, they've been very profitable supermarkets 204 00:08:35,660 --> 00:08:35,900 Historically, they've been in comparison to overseas. 205 00:08:35,900 --> 00:08:37,340 in comparison to overseas. 206 00:08:41,300 --> 00:08:43,100 Woolworths's latest annual report 207 00:08:43,100 --> 00:08:46,020 shows its cost of doing business was flat, 208 00:08:46,020 --> 00:08:53,140 but its profit margin from selling groceries rose from 5.3% to 6%. 209 00:08:53,140 --> 00:08:55,380 That may sound like a small increase, 210 00:08:55,380 --> 00:08:59,900 but it was worth an extra $318 million in profits 211 00:08:59,900 --> 00:09:00,140 but it was worth last year alone. 212 00:09:00,140 --> 00:09:01,900 last year alone. 213 00:09:04,060 --> 00:09:08,420 There are many things that go and drive the delivery of that result. 214 00:09:08,420 --> 00:09:11,260 It's a lot of hard work and productivity and investment. 215 00:09:11,260 --> 00:09:16,940 It's hard to see how you haven't used the cover of inflation 216 00:09:16,940 --> 00:09:17,180 It's hard to see how you haven't used to drive price increases above that, 217 00:09:17,180 --> 00:09:20,580 to drive price increases above that, 218 00:09:20,580 --> 00:09:20,820 and that's what most people to drive price increases above that, 219 00:09:20,820 --> 00:09:24,100 and that's what most people would see as price gouging. 220 00:09:24,100 --> 00:09:24,340 and that's what most people We certainly haven't done it. 221 00:09:24,340 --> 00:09:25,700 We certainly haven't done it. 222 00:09:25,700 --> 00:09:28,100 I personally have... 223 00:09:28,100 --> 00:09:31,580 I've reviewed the supplier-cost increases, 224 00:09:31,580 --> 00:09:32,940 which you would have to agree 225 00:09:32,940 --> 00:09:35,860 in many cases would have been legitimate. 226 00:09:35,860 --> 00:09:37,500 If you look at the price of fertiliser, 227 00:09:37,500 --> 00:09:39,500 what happened with international freight, 228 00:09:39,500 --> 00:09:42,220 their own wage issues, their own disruption issues, 229 00:09:42,220 --> 00:09:42,460 their own wage issues, and our prices on the shelf - 230 00:09:42,460 --> 00:09:43,820 and our prices on the shelf - 231 00:09:43,820 --> 00:09:45,860 that's the question you're really asking. 232 00:09:45,860 --> 00:09:48,380 To be precise, between the price on the shelf 233 00:09:48,380 --> 00:09:50,260 and the cost increase from the supplier - 234 00:09:50,260 --> 00:09:50,500 and the cost increase those have been in lockstep. 235 00:09:50,500 --> 00:09:52,020 those have been in lockstep. 236 00:09:53,460 --> 00:09:58,060 Coles saw a small increase in its cost of doing business last year, 237 00:09:58,060 --> 00:10:02,420 pushing its profit margin down slightly to 4.8%. 238 00:10:02,420 --> 00:10:06,740 But that margin is still higher than its peers in the UK. 239 00:10:06,740 --> 00:10:06,980 But that margin is still higher (BARKS) 240 00:10:06,980 --> 00:10:09,220 (BARKS) 241 00:10:09,220 --> 00:10:11,900 So, there are quite often comparisons that are made 242 00:10:11,900 --> 00:10:14,380 between the UK and Australia. 243 00:10:14,380 --> 00:10:19,860 But Australia has about a third of the population of the UK, 244 00:10:19,860 --> 00:10:20,100 But Australia has about a third but we operate stores 245 00:10:20,100 --> 00:10:21,820 but we operate stores 246 00:10:21,820 --> 00:10:26,180 on a geographic footprint which is 30 times the size, 247 00:10:26,180 --> 00:10:29,300 and, so, those considerations need to be taken into account 248 00:10:29,300 --> 00:10:29,540 and, so, those considerations when those margins are compared. 249 00:10:29,540 --> 00:10:31,220 when those margins are compared. 250 00:10:40,540 --> 00:10:43,820 There has always been a lot of debate around the numbers, 251 00:10:43,820 --> 00:10:47,260 and it's difficult to compare across countries. 252 00:10:47,260 --> 00:10:52,620 But it's harder to argue about the market power of the big two. 253 00:10:59,580 --> 00:11:02,140 I'm in the New South Wales town of Orange 254 00:11:02,140 --> 00:11:04,580 to meet cherry farmer Michael Cunial. 255 00:11:04,580 --> 00:11:06,180 Hey, Michael. 256 00:11:06,180 --> 00:11:08,660 Angus, hi. Hey. Nice to meet you. 257 00:11:08,660 --> 00:11:11,180 Good to meet you. Yeah. Thanks for having us. 258 00:11:11,180 --> 00:11:15,060 (INDISTINCT CHATTER) 259 00:11:16,020 --> 00:11:17,620 Good morning! 260 00:11:17,620 --> 00:11:19,220 I've come on a busy day. 261 00:11:19,220 --> 00:11:19,460 He's preparing to pick and pack I've come on a busy day. 262 00:11:19,460 --> 00:11:22,700 He's preparing to pick and pack this year's cherry crop. 263 00:11:22,700 --> 00:11:26,180 We had a little lull with weather as well, 264 00:11:26,180 --> 00:11:26,420 We had a little lull with weather and now we're ramping back into it. 265 00:11:26,420 --> 00:11:29,940 and now we're ramping back into it. 266 00:11:31,100 --> 00:11:33,900 Could I get you to roll the stickers? 267 00:11:34,900 --> 00:11:39,180 And I'll just print one more batch off, if you don't mind. 268 00:11:40,940 --> 00:11:45,220 This orchard has been in the Cunial family for three generations. 269 00:11:45,220 --> 00:11:49,780 My grandfather came over from Italy after the Second World War, 270 00:11:49,780 --> 00:11:54,020 and they got enough money to put a deposit down on a place. 271 00:11:54,020 --> 00:11:55,540 You know, they would work hard 272 00:11:55,540 --> 00:11:59,020 for, um...from sunup to sundown or even more. 273 00:11:59,020 --> 00:11:59,260 for, um...from sunup to sundown There was profit there. 274 00:11:59,260 --> 00:12:01,180 There was profit there. 275 00:12:06,740 --> 00:12:10,620 Michael Cunial is one of the few growers willing to speak with us. 276 00:12:11,580 --> 00:12:14,020 He's getting out of the industry. 277 00:12:14,020 --> 00:12:18,340 This year's crop will be the family's last. 278 00:12:18,340 --> 00:12:20,060 Why is the profit not there? 279 00:12:20,060 --> 00:12:24,180 We're reliant now on two major supermarkets, really, 280 00:12:24,180 --> 00:12:24,420 We're reliant now to buy all of our fruit. 281 00:12:24,420 --> 00:12:26,820 to buy all of our fruit. 282 00:12:26,820 --> 00:12:28,580 We're at the mercy of them. 283 00:12:28,580 --> 00:12:30,140 We're price takers, 284 00:12:30,140 --> 00:12:33,780 so, the profit just isn't there anymore. 285 00:12:33,780 --> 00:12:34,020 so, the profit It gets to you a little bit 286 00:12:34,020 --> 00:12:35,420 It gets to you a little bit 287 00:12:35,420 --> 00:12:37,780 because these are beautiful young trees 288 00:12:37,780 --> 00:12:42,060 and they're just coming to perfect production. 289 00:12:42,060 --> 00:12:44,820 You know, this is five or six years after planting. 290 00:12:44,820 --> 00:12:48,580 So, yeah, it's going to be a huge shame 291 00:12:48,580 --> 00:12:52,740 to see such fantastic trees and, you know, all that effort 292 00:12:52,740 --> 00:12:54,980 just getting pushed into a pile. 293 00:12:55,860 --> 00:12:58,300 It's like they've got their hand on your throat 294 00:12:58,300 --> 00:12:58,540 It's like they've got their hand and JUST letting you breathe. 295 00:12:58,540 --> 00:13:00,060 and JUST letting you breathe. 296 00:13:01,740 --> 00:13:05,300 Cunial stopped selling into Coles two years ago. 297 00:13:05,300 --> 00:13:05,540 Cunial stopped selling into Coles He's opened his books for us. 298 00:13:05,540 --> 00:13:07,580 He's opened his books for us. 299 00:13:07,580 --> 00:13:10,340 Well, there's a huge power imbalance. 300 00:13:10,340 --> 00:13:12,940 You know, you've got hundreds and hundreds of growers 301 00:13:12,940 --> 00:13:16,100 trying to sell to two main supermarkets. 302 00:13:16,100 --> 00:13:16,340 trying to sell So, they're dictating the price. 303 00:13:16,340 --> 00:13:18,900 So, they're dictating the price. 304 00:13:18,900 --> 00:13:19,140 They're controlling So, they're dictating the price. 305 00:13:19,140 --> 00:13:23,940 They're controlling what's being bought for how much. 306 00:13:23,940 --> 00:13:24,180 They're controlling So, it's a tricky situation. 307 00:13:24,180 --> 00:13:26,900 So, it's a tricky situation. 308 00:13:30,180 --> 00:13:31,860 His books show 309 00:13:31,860 --> 00:13:33,740 that in the 2022 growing season 310 00:13:33,740 --> 00:13:38,260 he sent 11 shipments to Coles via a third party. 311 00:13:39,140 --> 00:13:44,340 He made a small profit on four deliveries early in the season. 312 00:13:44,340 --> 00:13:45,980 For his next seven deliveries 313 00:13:45,980 --> 00:13:48,740 Michael Cunial went from just breaking even 314 00:13:48,740 --> 00:13:48,980 Michael Cunial to losing substantial money. 315 00:13:48,980 --> 00:13:51,700 to losing substantial money. 316 00:13:51,700 --> 00:13:56,780 And on one of those occasions his cherries were rejected outright. 317 00:13:59,500 --> 00:14:01,260 Would they ever tell you why it was rejected? 318 00:14:01,260 --> 00:14:03,420 There's multiple things to reject fruit, 319 00:14:03,420 --> 00:14:06,020 and, you know, they can pick something out of the air 320 00:14:06,020 --> 00:14:08,700 and say, "No, we don't like it because of this." 321 00:14:08,700 --> 00:14:12,260 And did you have any power to say, "I disagree with that"? 322 00:14:12,260 --> 00:14:12,500 And did you have any power to say, Absolutely no power at all. No. 323 00:14:12,500 --> 00:14:14,940 Absolutely no power at all. No. 324 00:14:14,940 --> 00:14:15,940 No. 325 00:14:15,940 --> 00:14:16,180 We just have to cop it unless you No. 326 00:14:16,180 --> 00:14:20,540 We just have to cop it unless you wanted to be sort of black-banded. 327 00:14:22,260 --> 00:14:24,460 One example stands out. 328 00:14:24,460 --> 00:14:25,980 Towards the end of that season, 329 00:14:25,980 --> 00:14:26,220 Cunial sent 15 tonnes of cherries Towards the end of that season, 330 00:14:26,220 --> 00:14:30,060 Cunial sent 15 tonnes of cherries to be sold at Coles - 331 00:14:30,060 --> 00:14:30,300 Cunial sent 15 tonnes of cherries an entire semitrailer load. 332 00:14:30,300 --> 00:14:32,620 an entire semitrailer load. 333 00:14:32,620 --> 00:14:37,340 He hoped to receive around $90,000 for his biggest shipment of the year, 334 00:14:37,340 --> 00:14:37,580 He hoped to receive around $90,000 which had been carefully graded 335 00:14:37,580 --> 00:14:39,500 which had been carefully graded 336 00:14:39,500 --> 00:14:42,580 to meet Coles's specifications. 337 00:14:42,580 --> 00:14:46,700 Instead, he was told the fruit was not up to standard, 338 00:14:46,700 --> 00:14:52,180 and he was only able to get $5,800 on the seconds market. 339 00:14:53,500 --> 00:14:56,380 When you're dealing with thousands and thousands of pieces of fruit, 340 00:14:56,380 --> 00:15:00,420 you can pick 10 pieces out and say, "This is no good." 341 00:15:00,420 --> 00:15:04,300 So, that is power, that's market power 342 00:15:04,300 --> 00:15:08,700 when you can simply reject something for no great reason. 343 00:15:08,700 --> 00:15:13,540 Would you acknowledge that there is a lack of transparency 344 00:15:13,540 --> 00:15:13,780 Would you acknowledge in how fresh produce is purchased? 345 00:15:13,780 --> 00:15:16,420 in how fresh produce is purchased? 346 00:15:17,380 --> 00:15:20,980 We enter into seasonal commitments with our supplier, 347 00:15:20,980 --> 00:15:24,500 and I don't know if this is a supplier to Coles, 348 00:15:24,500 --> 00:15:24,780 and I don't know if this is a supplier to Coles, but with our suppliers, our fresh-produce suppliers, 349 00:15:24,780 --> 00:15:26,820 but with our suppliers, our fresh-produce suppliers, 350 00:15:26,820 --> 00:15:28,860 we will enter into a seasonal contract. 351 00:15:28,860 --> 00:15:30,740 Isn't there a huge power imbalance there, 352 00:15:30,740 --> 00:15:30,980 Isn't there that, once the fruit is sent off, 353 00:15:30,980 --> 00:15:32,980 that, once the fruit is sent off, 354 00:15:32,980 --> 00:15:34,740 they have very little choice 355 00:15:34,740 --> 00:15:37,700 other than to take the price that they're given? 356 00:15:38,660 --> 00:15:41,260 So, as I said earlier, 357 00:15:41,260 --> 00:15:43,180 we work closely with our suppliers 358 00:15:43,180 --> 00:15:46,620 because we know our suppliers have to be successful 359 00:15:46,620 --> 00:15:47,900 for us to be successful. 360 00:15:52,620 --> 00:15:55,660 Fruit and vegetables are crucial for the big two. 361 00:15:55,660 --> 00:15:59,340 They're the first thing you see when you enter a store. 362 00:15:59,340 --> 00:16:02,060 JEREMY GRIFFITH: The retailers need to be able to offer apples and pears 363 00:16:02,060 --> 00:16:02,300 JEREMY GRIFFITH: The retailers need and all the horticultural products 364 00:16:02,300 --> 00:16:03,540 and all the horticultural products 365 00:16:03,540 --> 00:16:05,020 at a very, very good price 366 00:16:05,020 --> 00:16:07,420 to get customers through the door. 367 00:16:07,420 --> 00:16:08,860 And that means that they will put 368 00:16:08,860 --> 00:16:09,100 an extraordinary level of pressure on the growers And that means that they will put 369 00:16:09,100 --> 00:16:12,420 an extraordinary level of pressure on the growers 370 00:16:12,420 --> 00:16:12,660 an extraordinary level of pressure to buy at super-super-low prices. 371 00:16:12,660 --> 00:16:14,900 to buy at super-super-low prices. 372 00:16:14,900 --> 00:16:17,980 Can I give you a run-through of how the weekly buying process... 373 00:16:17,980 --> 00:16:20,220 Jeremy Griffith sits on the Horticulture Council 374 00:16:20,220 --> 00:16:22,460 at the National Farmers' Federation. 375 00:16:22,460 --> 00:16:25,020 He says Coles's and Woolworths's market power 376 00:16:25,020 --> 00:16:29,100 is having a profound impact on the industry. 377 00:16:29,100 --> 00:16:31,940 We have estimated in the last 12 months alone 378 00:16:31,940 --> 00:16:36,660 that we've taken the bulldozers to 15% of the Australian pear orchards. 379 00:16:36,660 --> 00:16:36,900 that we've taken the bulldozers to That's a remarkable number. 380 00:16:36,900 --> 00:16:38,660 That's a remarkable number. 381 00:16:38,660 --> 00:16:41,060 34% of vegetable growers interviewed 382 00:16:41,060 --> 00:16:43,940 said that they wanted to get out of the sector in the next 12 months. 383 00:16:43,940 --> 00:16:44,180 said that they wanted to get out The average age of growers - 384 00:16:44,180 --> 00:16:45,420 The average age of growers - 385 00:16:45,420 --> 00:16:46,940 and you would've seen this in your travels - 386 00:16:46,940 --> 00:16:47,180 and you would've seen this you know, it's way too old 387 00:16:47,180 --> 00:16:48,420 you know, it's way too old 388 00:16:48,420 --> 00:16:48,660 because no young person you know, it's way too old 389 00:16:48,660 --> 00:16:51,220 because no young person sees a future in this industry. 390 00:16:51,220 --> 00:16:51,460 because no young person It's a massive, massive issue. 391 00:16:51,460 --> 00:16:52,900 It's a massive, massive issue. 392 00:16:52,900 --> 00:16:54,940 We just need change, you know? 393 00:16:54,940 --> 00:16:57,900 That's the ultimate... That's where we are at this point in time. 394 00:16:57,900 --> 00:16:59,740 We can't keep doing this. 395 00:17:07,700 --> 00:17:11,300 While fresh food is the bait to get people through the door, 396 00:17:11,300 --> 00:17:16,220 your typical Coles or Woolworths store has more than 20,000 items. 397 00:17:19,220 --> 00:17:23,140 And if you really want to understand how the big retailers operate 398 00:17:23,140 --> 00:17:27,180 you need to speak with someone like Julian Hilliard. 399 00:17:27,180 --> 00:17:27,420 you need to speak with someone He spent 38 years in retail, 400 00:17:27,420 --> 00:17:29,660 He spent 38 years in retail, 401 00:17:29,660 --> 00:17:31,260 including working as a buyer 402 00:17:31,260 --> 00:17:33,740 and what's known as a category manager 403 00:17:33,740 --> 00:17:35,980 for both Coles and Woolworths. 404 00:17:36,820 --> 00:17:41,900 He's bought everything from cereal to nappies to laundry detergent. 405 00:17:41,900 --> 00:17:44,700 JULIAN HILLIARD: It's your job to pick that right assortment, 406 00:17:44,700 --> 00:17:44,940 JULIAN HILLIARD: It's your job that right mix of products 407 00:17:44,940 --> 00:17:46,180 that right mix of products 408 00:17:46,180 --> 00:17:46,420 that's going to maintain that right mix of products 409 00:17:46,420 --> 00:17:49,580 that's going to maintain the customer satisfaction, 410 00:17:49,580 --> 00:17:49,820 that's going to maintain suit all their needs 411 00:17:49,820 --> 00:17:51,260 suit all their needs 412 00:17:51,260 --> 00:17:55,260 and obviously assist you in achieving your targets. 413 00:17:55,260 --> 00:17:57,380 Is there pressure to hit those targets? 414 00:17:57,380 --> 00:17:59,100 There's always pressure to hit targets. 415 00:17:59,100 --> 00:18:02,500 There's sales targets. There's margin targets. 416 00:18:02,500 --> 00:18:02,740 There's sales targets. There's market-share targets. 417 00:18:02,740 --> 00:18:04,580 There's market-share targets. 418 00:18:04,580 --> 00:18:06,460 Then there's profit-dollar targets. 419 00:18:06,460 --> 00:18:09,020 So, definitely lots of ways 420 00:18:09,020 --> 00:18:11,700 that your performance would be assessed. 421 00:18:13,940 --> 00:18:16,140 This might give you the impression 422 00:18:16,140 --> 00:18:19,100 that Coles and Woolworths are in a fierce price war. 423 00:18:19,100 --> 00:18:19,340 that Coles and Woolworths But that's not how the duopoly works. 424 00:18:19,340 --> 00:18:22,500 But that's not how the duopoly works. 425 00:18:22,500 --> 00:18:25,020 There's a term called 'Colesworth'. 426 00:18:25,020 --> 00:18:26,460 Mm-hm. 427 00:18:26,460 --> 00:18:27,820 What does that mean to you? 428 00:18:27,820 --> 00:18:28,060 I think it's a generic term people use What does that mean to you? 429 00:18:28,060 --> 00:18:30,460 I think it's a generic term people use 430 00:18:30,460 --> 00:18:32,420 to describe the fact that there's not a lot of difference 431 00:18:32,420 --> 00:18:32,660 to describe the fact between Coles and Woolworths. 432 00:18:32,660 --> 00:18:34,100 between Coles and Woolworths. 433 00:18:34,100 --> 00:18:35,180 How closely 434 00:18:35,180 --> 00:18:35,420 How closely do Coles and Woolworths track each other on price? 435 00:18:35,420 --> 00:18:38,580 do Coles and Woolworths track each other on price? 436 00:18:38,580 --> 00:18:42,300 They're more or less identical in many respects. 437 00:18:42,300 --> 00:18:45,180 Both organisations would have teams of people 438 00:18:45,180 --> 00:18:46,620 that would be checking prices 439 00:18:46,620 --> 00:18:49,540 to ensure that you were not exceeding 440 00:18:49,540 --> 00:18:54,900 what was, I guess, deemed to be the acceptable price in the marketplace. 441 00:18:54,900 --> 00:18:57,180 So, are you saying when you worked for Woolworths 442 00:18:57,180 --> 00:18:58,460 and Coles put a price up 443 00:18:58,460 --> 00:19:00,940 you'd follow pretty quickly afterwards? 444 00:19:00,940 --> 00:19:02,740 That would normally be the case. 445 00:19:03,700 --> 00:19:06,340 I would probably say that, you know, 446 00:19:06,340 --> 00:19:10,220 if you did five shops in Woolworths and five shops in Coles 447 00:19:10,220 --> 00:19:10,460 if you did five shops in Woolworths and you spent $100, 448 00:19:10,460 --> 00:19:12,180 and you spent $100, 449 00:19:12,180 --> 00:19:12,420 you'd be a few cents difference, and you spent $100, 450 00:19:12,420 --> 00:19:16,180 you'd be a few cents difference, maybe, depending on the specials. 451 00:19:17,140 --> 00:19:19,380 The fact there's little difference on price 452 00:19:19,380 --> 00:19:24,180 is something that even Coles CEO, Leah Weckert, concedes. 453 00:19:24,180 --> 00:19:26,100 You do price match with Woolworths, do you? 454 00:19:26,100 --> 00:19:26,380 We certainly have as one of our considerations when we set price You do price match with Woolworths, do you? 455 00:19:26,380 --> 00:19:28,940 We certainly have as one of our considerations when we set price 456 00:19:28,940 --> 00:19:31,780 is what is the price of the other retailers, not just Woolworths, 457 00:19:31,780 --> 00:19:32,060 is what is the price of the other retailers, not just Woolworths, but all other retailers in the market 458 00:19:32,060 --> 00:19:33,940 but all other retailers in the market 459 00:19:33,940 --> 00:19:36,740 that compete in the category that we're looking at. 460 00:19:36,740 --> 00:19:40,100 Are you familiar with the term 'Colesworth'? 461 00:19:40,100 --> 00:19:40,340 Are you familiar I'm not. 462 00:19:40,340 --> 00:19:41,620 I'm not. 463 00:19:47,860 --> 00:19:50,260 Without the distraction of a price war, 464 00:19:50,260 --> 00:19:54,100 the big two can instead focus on pumping up their profit margins 465 00:19:54,100 --> 00:19:54,340 the big two can instead focus to satisfy the share market. 466 00:19:54,340 --> 00:19:56,580 to satisfy the share market. 467 00:19:56,580 --> 00:20:00,620 And it's suppliers who bear the brunt of this. 468 00:20:00,620 --> 00:20:05,300 They say Coles and Woolworths play the game ruthlessly. 469 00:20:10,580 --> 00:20:12,620 INDUSTRY INSIDER: It's absolutely ridiculous, 470 00:20:12,620 --> 00:20:16,780 the margins that they make, the tactics that they deploy. 471 00:20:16,780 --> 00:20:22,300 One industry insider has had enough and is now speaking out. 472 00:20:22,300 --> 00:20:22,540 One industry insider has had enough You're essentially at their mercy 473 00:20:22,540 --> 00:20:25,180 You're essentially at their mercy 474 00:20:25,180 --> 00:20:27,660 in terms of how they want to deal with you, 475 00:20:27,660 --> 00:20:29,460 what kind of money they want, 476 00:20:29,460 --> 00:20:31,180 and they can make brands overnight 477 00:20:31,180 --> 00:20:33,060 and they can destroy brands overnight. 478 00:20:33,060 --> 00:20:37,180 That's the reality because of their market power and concentration. 479 00:20:38,140 --> 00:20:40,340 He's asked not to be identified 480 00:20:40,340 --> 00:20:42,100 because he works for a company 481 00:20:42,100 --> 00:20:44,940 currently supplying into Coles and Woolworths. 482 00:20:46,300 --> 00:20:48,820 If you're not willing to play their game, 483 00:20:48,820 --> 00:20:49,060 If you're not willing it's a lot of intimidation, 484 00:20:49,060 --> 00:20:50,580 it's a lot of intimidation, 485 00:20:50,580 --> 00:20:52,260 jacking up prices 486 00:20:52,260 --> 00:20:53,900 or deleting it from the shelf 487 00:20:53,900 --> 00:20:58,180 and forcing customers to essentially go buy your competitor's product. 488 00:20:58,180 --> 00:20:58,420 and forcing customers to essentially He says Coles and Woolworths 489 00:20:58,420 --> 00:21:00,100 He says Coles and Woolworths 490 00:21:00,100 --> 00:21:03,820 are always looking to increase their profit margins. 491 00:21:03,820 --> 00:21:07,140 He cites a recent email exchange with a Coles buyer 492 00:21:07,140 --> 00:21:07,380 He cites a recent email exchange where he asked for a price increase. 493 00:21:07,380 --> 00:21:09,860 where he asked for a price increase. 494 00:21:09,860 --> 00:21:15,380 Initially, he rejected, or said, "I can't accept this cost increase 495 00:21:15,380 --> 00:21:20,820 "based on the current climate and the impact on consumers." 496 00:21:20,820 --> 00:21:25,980 The Coles buyer argued the increase of around 5% wasn't justified. 497 00:21:25,980 --> 00:21:27,980 That's where the negotiations started, 498 00:21:27,980 --> 00:21:30,780 and we ended up giving a lump sum of money 499 00:21:30,780 --> 00:21:31,020 and we ended up to get the price increase through, 500 00:21:31,020 --> 00:21:32,580 to get the price increase through, 501 00:21:32,580 --> 00:21:34,900 which was accepted in full. 502 00:21:34,900 --> 00:21:39,420 So, you're saying that they will validate your price increase 503 00:21:39,420 --> 00:21:43,140 if you give them either more margin or a lump sum of money? 504 00:21:43,140 --> 00:21:43,380 if you give them either more margin Correct. 505 00:21:43,380 --> 00:21:44,140 Correct. 506 00:21:44,140 --> 00:21:44,380 That lump sum Correct. 507 00:21:44,380 --> 00:21:49,140 That lump sum was $25,000 towards promotions. 508 00:21:49,140 --> 00:21:52,620 The Coles buyer's initial concern for the consumer 509 00:21:52,620 --> 00:21:52,860 The Coles buyer's had been quickly forgotten. 510 00:21:52,860 --> 00:21:55,260 had been quickly forgotten. 511 00:21:58,100 --> 00:22:00,340 There are other costs for suppliers 512 00:22:00,340 --> 00:22:03,100 wanting to do business with the big two, 513 00:22:03,100 --> 00:22:03,340 wanting to do business including in-house advertising. 514 00:22:03,340 --> 00:22:05,380 including in-house advertising. 515 00:22:05,380 --> 00:22:11,540 A full-page ad in Woolworths Fresh magazine will cost $30,000. 516 00:22:11,540 --> 00:22:14,980 A four-week spot on Coles Radio - $28,000. 517 00:22:14,980 --> 00:22:20,460 And these all contribute to higher prices for customers at the checkout. 518 00:22:21,660 --> 00:22:23,460 They're the ones that are getting screwed. 519 00:22:23,460 --> 00:22:26,340 It just means higher prices at the shelf 520 00:22:26,340 --> 00:22:29,380 because the supermarkets are extremely greedy. 521 00:22:29,380 --> 00:22:29,620 because the supermarkets Why do you want to speak out? 522 00:22:29,620 --> 00:22:32,340 Why do you want to speak out? 523 00:22:32,340 --> 00:22:35,940 I honestly think it's the right thing to do. 524 00:22:35,940 --> 00:22:39,540 I think the current situation has gotten extremely out of hand. 525 00:22:39,540 --> 00:22:42,060 You go to the supermarket, you buy a few items, 526 00:22:42,060 --> 00:22:44,740 you're already talking $75 to $100. 527 00:22:44,740 --> 00:22:47,500 A lot of Aussies are struggling out there. 528 00:22:47,500 --> 00:22:47,780 So, you have an email from one supplier. A lot of Aussies are struggling out there. 529 00:22:47,780 --> 00:22:50,660 So, you have an email from one supplier. 530 00:22:50,660 --> 00:22:50,900 So, you have an email We have over 8,000 suppliers 531 00:22:50,900 --> 00:22:53,140 We have over 8,000 suppliers 532 00:22:53,140 --> 00:22:54,580 that we work with. 533 00:22:54,580 --> 00:22:56,620 We have a team of people 534 00:22:56,620 --> 00:22:56,860 whose job it is to look to validate We have a team of people 535 00:22:56,860 --> 00:23:00,460 whose job it is to look to validate cost-price increases, 536 00:23:00,460 --> 00:23:00,700 whose job it is to look to validate and we take that job very seriously. 537 00:23:00,700 --> 00:23:02,940 and we take that job very seriously. 538 00:23:02,940 --> 00:23:05,580 He says that's the definition of price gouging. 539 00:23:10,060 --> 00:23:11,900 Is that the case? 540 00:23:11,900 --> 00:23:14,380 We don't engage in practices like that. 541 00:23:14,380 --> 00:23:17,020 We're working... So, you're saying absolutely 542 00:23:17,020 --> 00:23:21,100 that this is not a practice that you engage in - 543 00:23:21,100 --> 00:23:23,860 to use a price increase 544 00:23:23,860 --> 00:23:27,140 to increase your margin or your bottom line in another way? 545 00:23:27,140 --> 00:23:30,780 I would need to see the specifics of any particular scenario 546 00:23:30,780 --> 00:23:33,220 to judge whether it's reasonable or not. 547 00:23:33,220 --> 00:23:35,100 What we have certainly seen 548 00:23:35,100 --> 00:23:37,900 is that there has been inflation in cost basis. 549 00:23:37,900 --> 00:23:38,140 is that there has been inflation Coles has not been immune to that. 550 00:23:38,140 --> 00:23:40,180 Coles has not been immune to that. 551 00:23:40,180 --> 00:23:40,420 The increases have been substantial Coles has not been immune to that. 552 00:23:40,420 --> 00:23:43,260 The increases have been substantial over the last couple of years. 553 00:23:43,260 --> 00:23:49,100 And, so, some of that does flow through to the consumer. 554 00:23:50,780 --> 00:23:55,980 Woolworths denies using similar tactics against its suppliers. 555 00:23:55,980 --> 00:23:58,500 BRAD BANDUCCI: When a supplier asks for a price increase, 556 00:23:58,500 --> 00:23:58,740 BRAD BANDUCCI: When a supplier we would like to engage 557 00:23:58,740 --> 00:24:00,380 we would like to engage 558 00:24:00,380 --> 00:24:00,620 to make sure it's based on true cost increases, we would like to engage 559 00:24:00,620 --> 00:24:03,180 to make sure it's based on true cost increases, 560 00:24:03,180 --> 00:24:06,500 and we do that in the context of complying with the code. 561 00:24:06,500 --> 00:24:06,740 and we do that in the context of complying with the code. And, so, you know, we're very keen 562 00:24:06,740 --> 00:24:08,380 And, so, you know, we're very keen 563 00:24:08,380 --> 00:24:10,540 to make sure we don't pass on anything more to our customers 564 00:24:10,540 --> 00:24:10,780 to make sure we don't pass on than is required. 565 00:24:10,780 --> 00:24:11,940 than is required. 566 00:24:13,260 --> 00:24:14,740 As a buyer, 567 00:24:14,740 --> 00:24:20,220 Julian Hilliard says it was his job to put pressure on suppliers. 568 00:24:20,220 --> 00:24:21,820 JULIAN HILLIARD: Certainly there would be 569 00:24:21,820 --> 00:24:22,060 uncomfortable conversations. JULIAN HILLIARD: Certainly there would be 570 00:24:22,060 --> 00:24:23,980 uncomfortable conversations. 571 00:24:23,980 --> 00:24:25,300 There's no question of that. 572 00:24:25,300 --> 00:24:29,380 Now, some people might classify that as robust business... 573 00:24:30,340 --> 00:24:32,260 ..um...discussion. 574 00:24:32,260 --> 00:24:34,460 I guess if I felt 575 00:24:34,460 --> 00:24:36,740 that someone had already given me 576 00:24:36,740 --> 00:24:38,620 everything they could possibly give me, 577 00:24:38,620 --> 00:24:38,860 everything and I had to ask for more, 578 00:24:38,860 --> 00:24:39,980 and I had to ask for more, 579 00:24:39,980 --> 00:24:40,220 then, personally, and I had to ask for more, 580 00:24:40,220 --> 00:24:42,820 then, personally, I felt that that was probably 581 00:24:42,820 --> 00:24:43,060 then, personally, a little...a little bit, um... 582 00:24:43,060 --> 00:24:45,300 a little...a little bit, um... 583 00:24:45,300 --> 00:24:46,820 ..a little bit of a stretch. 584 00:24:52,220 --> 00:24:56,140 The establishment in 2015 of a Food and Grocery Code of Conduct 585 00:24:56,140 --> 00:24:58,660 was supposed to take some of this friction 586 00:24:58,660 --> 00:25:02,220 out of the supermarket-supplier relationship. 587 00:25:03,180 --> 00:25:07,980 Under the code, each supermarket appoints and pays for an arbiter 588 00:25:07,980 --> 00:25:08,220 Under the code, each supermarket to handle its complaints. 589 00:25:08,220 --> 00:25:10,060 to handle its complaints. 590 00:25:11,260 --> 00:25:13,260 ROD SIMS: The Grocery Code of Conduct 591 00:25:13,260 --> 00:25:13,500 ROD SIMS: is, quite frankly, a disgrace. 592 00:25:13,500 --> 00:25:15,500 is, quite frankly, a disgrace. 593 00:25:15,500 --> 00:25:15,700 You have a code with no penalties. is, quite frankly, a disgrace. 594 00:25:15,700 --> 00:25:18,900 You have a code with no penalties. 595 00:25:18,900 --> 00:25:20,980 Now, let me just emphasise that. 596 00:25:20,980 --> 00:25:23,180 That is like having a speed limit 597 00:25:23,180 --> 00:25:24,700 throughout one of our cities 598 00:25:24,700 --> 00:25:26,420 of 60 kilometres an hour, 599 00:25:26,420 --> 00:25:27,980 that's the speed limit, 600 00:25:27,980 --> 00:25:28,220 then someone says, that's the speed limit, 601 00:25:28,220 --> 00:25:29,820 then someone says, "What happens if I go 80?" 602 00:25:29,820 --> 00:25:30,060 then someone says, "Nothing. There's no penalty." 603 00:25:30,060 --> 00:25:32,300 "Nothing. There's no penalty." 604 00:25:32,300 --> 00:25:34,140 So, the law is a joke. 605 00:25:34,140 --> 00:25:35,940 The code of conduct is a joke. 606 00:25:39,660 --> 00:25:41,140 Why do you think it is 607 00:25:41,140 --> 00:25:44,540 that Woolworths has never had a single complaint 608 00:25:44,540 --> 00:25:44,780 that Woolworths under the Grocery Code of Conduct? 609 00:25:44,780 --> 00:25:47,020 under the Grocery Code of Conduct? 610 00:25:47,020 --> 00:25:47,260 I mean, you know, you would under the Grocery Code of Conduct? 611 00:25:47,260 --> 00:25:50,380 I mean, you know, you would have to go and ask suppliers 612 00:25:50,380 --> 00:25:51,940 why that's the case. Well, let me tell you. 613 00:25:51,940 --> 00:25:55,180 Sure. Your own arbiter, Helen McKenzie... 614 00:25:55,180 --> 00:25:55,420 Sure. OK. Helen. Yep. 615 00:25:55,420 --> 00:25:56,180 OK. Helen. Yep. 616 00:25:56,180 --> 00:25:56,420 ..has said that suppliers OK. Helen. Yep. 617 00:25:56,420 --> 00:26:01,580 ..has said that suppliers are frightened to complain 618 00:26:01,580 --> 00:26:01,820 ..has said that suppliers and that they fear retribution. 619 00:26:01,820 --> 00:26:03,700 and that they fear retribution. 620 00:26:03,700 --> 00:26:06,180 Look, I think it's just the nature of any relationship 621 00:26:06,180 --> 00:26:08,180 that there's going to be that anxiety. 622 00:26:08,180 --> 00:26:11,300 It's a lot stronger word than 'anxiety'. 623 00:26:11,300 --> 00:26:13,540 So, we engage with our suppliers every week. 624 00:26:13,540 --> 00:26:16,660 We have robust conversations every week. 625 00:26:16,660 --> 00:26:18,980 We resolve issues every week. 626 00:26:18,980 --> 00:26:20,460 It's only if you can't do that 627 00:26:20,460 --> 00:26:24,180 that you go to a...to a code arbiter or anything else. 628 00:26:25,620 --> 00:26:28,660 Coles had no complaints under the code last financial year 629 00:26:28,660 --> 00:26:31,900 and just five in the previous two years. 630 00:26:31,900 --> 00:26:32,140 and just five On three of those occasions 631 00:26:32,140 --> 00:26:33,540 On three of those occasions 632 00:26:33,540 --> 00:26:37,340 it agreed to compensate the suppliers. 633 00:26:37,340 --> 00:26:39,060 So, they say they fear retribution 634 00:26:39,060 --> 00:26:42,380 and, so, they would not make a formal complaint. 635 00:26:42,380 --> 00:26:42,620 Well, that is not in line and, so, they would not make a formal complaint. 636 00:26:42,620 --> 00:26:44,300 Well, that is not in line 637 00:26:44,300 --> 00:26:48,380 with the culture that we have at Coles. 638 00:26:48,380 --> 00:26:49,500 And that is why 639 00:26:49,500 --> 00:26:49,740 And that is why I think most issues are actually resolved in the first instance 640 00:26:49,740 --> 00:26:53,100 I think most issues are actually resolved in the first instance 641 00:26:53,100 --> 00:26:53,340 I think most issues are actually by our suppliers and our farmers 642 00:26:53,340 --> 00:26:54,780 by our suppliers and our farmers 643 00:26:54,780 --> 00:26:56,820 having a conversation with our category teams. 644 00:26:56,820 --> 00:26:58,260 So, you think it's working well? 645 00:26:58,260 --> 00:27:00,820 I'm not saying that anyone is not complaining. 646 00:27:00,820 --> 00:27:03,140 I'm saying that a lot of these issues 647 00:27:03,140 --> 00:27:06,980 are getting raised with our category teams and being worked through. 648 00:27:10,340 --> 00:27:14,340 The Food and Grocery Code of Conduct is now under review, 649 00:27:14,340 --> 00:27:14,580 The Food and Grocery Code of Conduct with a push to make it mandatory 650 00:27:14,580 --> 00:27:16,260 with a push to make it mandatory 651 00:27:16,260 --> 00:27:20,260 and to impose fines on those who breach it. 652 00:27:20,260 --> 00:27:22,580 The federal government is also reviewing 653 00:27:22,580 --> 00:27:22,820 The federal government Australia's competition laws. 654 00:27:22,820 --> 00:27:24,300 Australia's competition laws. 655 00:27:25,540 --> 00:27:29,620 Brad Banducci is adamant competition is fierce, 656 00:27:29,620 --> 00:27:33,900 even going as far as talking up rivals like Aldi. 657 00:27:35,420 --> 00:27:38,940 They've got 590 stores. Aldi - they're an amazing business. 658 00:27:38,940 --> 00:27:41,180 Uh... They drive incredible value. 659 00:27:41,180 --> 00:27:41,380 Uh... They drive incredible value. They have 10% of the market, though. 660 00:27:41,380 --> 00:27:43,260 They have 10% of the market, though. 661 00:27:43,260 --> 00:27:44,540 It's not the percentage they have. 662 00:27:44,540 --> 00:27:46,140 They're in every community, 663 00:27:46,140 --> 00:27:47,580 and it makes customers have a choice 664 00:27:47,580 --> 00:27:50,580 between a Woolworths, a Coles and an Aldi at minimum. 665 00:27:50,580 --> 00:27:53,940 And, by the way, just up the road is a Costco warehouse. 666 00:27:53,940 --> 00:27:57,340 Sorry, you're saying that actually there is really robust competition? 667 00:27:57,340 --> 00:27:58,100 Yeah... 668 00:27:58,100 --> 00:28:00,220 Rod Sims, the former head of the ACCC, 669 00:28:00,220 --> 00:28:00,460 Rod Sims, says that we have one of the most 670 00:28:00,460 --> 00:28:02,220 says that we have one of the most 671 00:28:02,220 --> 00:28:04,380 concentrated supermarkets in the world. 672 00:28:04,380 --> 00:28:05,820 Is he lying? It's not true. It's not true. 673 00:28:05,820 --> 00:28:06,060 Is he lying? And it's... It is not true. 674 00:28:06,060 --> 00:28:08,740 And it's... It is not true. 675 00:28:08,740 --> 00:28:10,460 This community over here, 676 00:28:10,460 --> 00:28:13,980 there will be three Coles stores within two kilometres of it, 677 00:28:13,980 --> 00:28:15,620 at least one Aldi store, 678 00:28:15,620 --> 00:28:17,260 a series of independents, 679 00:28:17,260 --> 00:28:19,340 ability to within 24 hours 680 00:28:19,340 --> 00:28:23,380 have a quarter of our store delivered to you by Amazon. 681 00:28:23,380 --> 00:28:25,420 It is an incredibly competitive market. 682 00:28:25,420 --> 00:28:26,940 The risk people have is... I'm sorry, 683 00:28:26,940 --> 00:28:29,460 the former ahead of the Competition Commission says... 684 00:28:29,460 --> 00:28:31,940 You know that... ..his words are... 685 00:28:31,940 --> 00:28:32,900 Retired. 686 00:28:32,900 --> 00:28:34,380 By the way. 687 00:28:34,380 --> 00:28:36,860 I don't think you would impugn his integrity 688 00:28:36,860 --> 00:28:39,100 and his understanding of competition law. 689 00:28:39,100 --> 00:28:41,380 I'm just saying the world has got much more competitive. 690 00:28:41,380 --> 00:28:41,620 I'm just saying the world He retired 18 months ago. He's not... 691 00:28:41,620 --> 00:28:44,260 He retired 18 months ago. He's not... 692 00:28:44,260 --> 00:28:47,220 OK, let's... Well, can we take that out? Is that OK? 693 00:28:48,180 --> 00:28:50,460 I should... I mean, he IS retired, 694 00:28:50,460 --> 00:28:52,740 but I shouldn't have said that, Angus. 695 00:28:52,740 --> 00:28:54,620 Are we going to leave it in there? If we are... 696 00:28:54,620 --> 00:28:58,940 Well, I mean, we're on the record. You said it. I mean, you know... 697 00:28:58,940 --> 00:29:01,020 Let's move on. But... Yeah. (WOMAN SPEAKS INDISTINCTLY) 698 00:29:01,020 --> 00:29:01,260 Let's move on. But... Yeah. Yeah, no, I think I'm done, guys. 699 00:29:01,260 --> 00:29:03,500 Yeah, no, I think I'm done, guys. 700 00:29:03,500 --> 00:29:06,100 Uh... You know, I do this with good intent. 701 00:29:06,100 --> 00:29:07,940 You know, I don't do this with bad intent. 702 00:29:07,940 --> 00:29:08,180 You know, You're walking out? Really? 703 00:29:08,180 --> 00:29:09,420 You're walking out? Really? 704 00:29:09,420 --> 00:29:11,900 No, no, no. Can we just talk to Brad for a sec? 705 00:29:11,900 --> 00:29:13,620 Let me just... We'll just have a minute. 706 00:29:13,620 --> 00:29:15,540 We'll just pause. We'll be finished in a sec. 707 00:29:15,540 --> 00:29:15,780 We'll just pause. Come here for a... 708 00:29:15,780 --> 00:29:17,060 Come here for a... 709 00:29:28,900 --> 00:29:30,580 Let's keep going. 710 00:29:35,580 --> 00:29:38,260 AD VOICEOVER: Australia, we've never been more excited 711 00:29:38,260 --> 00:29:38,500 AD VOICEOVER: Australia, because whenever... 712 00:29:38,500 --> 00:29:39,740 because whenever... 713 00:29:39,740 --> 00:29:42,060 The supermarkets are feeling the pressure. 714 00:29:42,060 --> 00:29:44,660 It means you're getting great value hands down. 715 00:29:44,660 --> 00:29:47,740 One tactic they've been using to get the public back on side 716 00:29:47,740 --> 00:29:51,780 is the lure of specials, as seen in their slick ads. 717 00:29:53,540 --> 00:29:55,580 AD VOICEOVER: At Woolworths, we can help you spend less... 718 00:29:55,580 --> 00:30:00,380 In recent months the big two have both announced store-wide price cuts. 719 00:30:00,380 --> 00:30:00,620 In recent months the big two have That's today's fresh food people. 720 00:30:00,620 --> 00:30:03,140 That's today's fresh food people. 721 00:30:12,220 --> 00:30:17,220 I'm on my way to see Rosie Thomas, the campaigns director at CHOICE. 722 00:30:18,940 --> 00:30:21,540 I've brought some groceries with me. 723 00:30:23,980 --> 00:30:26,700 So, what can you tell us about these ones? 724 00:30:26,700 --> 00:30:26,940 So, what can you tell us Ah. I recognise these products. 725 00:30:26,940 --> 00:30:28,620 Ah. I recognise these products. 726 00:30:28,620 --> 00:30:30,260 So, these barbecue briquettes, 727 00:30:30,260 --> 00:30:30,500 this is the product where we caught So, these barbecue briquettes, 728 00:30:30,500 --> 00:30:34,460 this is the product where we caught Coles out raising locked prices. 729 00:30:34,460 --> 00:30:39,020 It was not just one item where Coles had misled consumers. 730 00:30:39,020 --> 00:30:40,060 Band-Aids? Yes. 731 00:30:40,060 --> 00:30:42,220 Again, there was a locked-price promise, 732 00:30:42,220 --> 00:30:44,620 but then they put up prices before they should have. 733 00:30:44,620 --> 00:30:48,100 After CHOICE complained to the ACCC about the briquettes 734 00:30:48,100 --> 00:30:48,340 After CHOICE complained Coles conceded there were 20 items 735 00:30:48,340 --> 00:30:51,060 Coles conceded there were 20 items 736 00:30:51,060 --> 00:30:53,020 where prices had not been locked 737 00:30:53,020 --> 00:30:53,260 for as long where prices had not been locked 738 00:30:53,260 --> 00:30:56,300 for as long as the retailer had promised. 739 00:30:56,300 --> 00:30:58,180 I'm surprised by this one. Cornflakes? 740 00:30:58,180 --> 00:31:00,460 Yeah, Cornflakes, a staple in so many households, 741 00:31:00,460 --> 00:31:02,660 and people were paying more than they should have. 742 00:31:02,660 --> 00:31:05,540 So, Coles was caught red-handed. 743 00:31:05,540 --> 00:31:09,260 They've started refunding the amounts 744 00:31:09,260 --> 00:31:09,540 to any consumers who have Flybuys accounts or shopped online, They've started refunding the amounts 745 00:31:09,540 --> 00:31:14,500 to any consumers who have Flybuys accounts or shopped online, 746 00:31:14,500 --> 00:31:16,660 but there will still be a large number of consumers 747 00:31:16,660 --> 00:31:16,900 but there will still be a large number of consumers who bought these products in store, 748 00:31:16,900 --> 00:31:18,700 who bought these products in store, 749 00:31:18,700 --> 00:31:21,380 and, unless they show up with receipts, 750 00:31:21,380 --> 00:31:21,620 and, unless they show up they're not going to get refunds. 751 00:31:21,620 --> 00:31:22,860 they're not going to get refunds. 752 00:31:22,860 --> 00:31:25,180 And, so, we really want to know what Coles is doing 753 00:31:25,180 --> 00:31:28,540 with that extra money that it's held on to unfairly. 754 00:31:28,540 --> 00:31:32,060 So, despite having misled the consumers on 20 occasions, 755 00:31:32,060 --> 00:31:35,380 there has been no tangible punishment for Coles? 756 00:31:35,380 --> 00:31:37,900 Not yet, other than refunding the money, 757 00:31:37,900 --> 00:31:40,540 which they really shouldn't have kept to begin with. 758 00:31:40,540 --> 00:31:40,780 which they really Do you know how much you've refunded? 759 00:31:40,780 --> 00:31:42,220 Do you know how much you've refunded? 760 00:31:42,220 --> 00:31:42,420 We have refunded substantially more Do you know how much you've refunded? 761 00:31:42,420 --> 00:31:45,340 We have refunded substantially more 762 00:31:45,340 --> 00:31:49,020 than what the benefit was to Coles 763 00:31:49,020 --> 00:31:49,220 than what the benefit was to Coles from the increase in price. 764 00:31:49,220 --> 00:31:50,780 from the increase in price. 765 00:31:50,780 --> 00:31:52,900 And I think what's important to me 766 00:31:52,900 --> 00:31:54,380 is that we have worked hard 767 00:31:54,380 --> 00:31:54,620 to understand is that we have worked hard 768 00:31:54,620 --> 00:31:56,860 to understand what went wrong with the processes 769 00:31:56,860 --> 00:31:59,860 so that they don't happen going forward. 770 00:31:59,860 --> 00:32:01,580 Can you give us the figures of how much 771 00:32:01,580 --> 00:32:04,100 customers spent and what you refunded? 772 00:32:04,100 --> 00:32:05,340 I don't think that's appropriate 773 00:32:05,340 --> 00:32:07,820 that we get into that level of detail. 774 00:32:07,820 --> 00:32:08,860 Cheap! Cheap! 775 00:32:08,860 --> 00:32:10,380 SONG: # Really, really cheap 776 00:32:10,380 --> 00:32:10,620 # Really, really cheap SONG: # Really, really cheap 777 00:32:10,620 --> 00:32:12,580 # Really, really cheap Really, really cheap... # 778 00:32:12,580 --> 00:32:14,860 Here's the thing you need to know about specials - 779 00:32:14,860 --> 00:32:15,100 Here's the thing you need to know they're not really that special. 780 00:32:15,100 --> 00:32:17,420 they're not really that special. 781 00:32:17,420 --> 00:32:19,260 Grocery suppliers and brands 782 00:32:19,260 --> 00:32:19,500 are often expected to fund these Grocery suppliers and brands 783 00:32:19,500 --> 00:32:23,460 are often expected to fund these promotions, not the supermarkets. 784 00:32:23,460 --> 00:32:23,700 are often expected to fund these # The word on the street... # 785 00:32:23,700 --> 00:32:25,060 # The word on the street... # 786 00:32:25,060 --> 00:32:28,620 That means suppliers need to set their recommended retail price 787 00:32:28,620 --> 00:32:28,860 That means suppliers need to set at a higher level 788 00:32:28,860 --> 00:32:30,180 at a higher level 789 00:32:30,180 --> 00:32:30,420 knowing they will have to offer at a higher level 790 00:32:30,420 --> 00:32:35,180 knowing they will have to offer deep discounts for much of the year. 791 00:32:35,180 --> 00:32:37,700 (WHISTLING OF WOOLWORTHS THEME MUSIC) 792 00:32:37,700 --> 00:32:42,060 I'm guessing that the normal price of this is probably over $30. 793 00:32:42,060 --> 00:32:42,300 I'm guessing that the normal price In fact, yes, it is. $31. 794 00:32:42,300 --> 00:32:44,940 In fact, yes, it is. $31. 795 00:32:44,940 --> 00:32:46,660 It's on special for $14.50. 796 00:32:46,660 --> 00:32:50,500 Who would ever pay over $30 for that item? 797 00:32:50,500 --> 00:32:54,460 So, why do they even have the recommended retail price? 798 00:32:54,460 --> 00:32:54,740 I guess they have to set a price and then they'll promote off it. So, why do they even have the recommended retail price? 799 00:32:54,740 --> 00:32:57,820 I guess they have to set a price and then they'll promote off it. 800 00:32:57,820 --> 00:33:00,540 You might ask yourself, or I would ask myself, you know, 801 00:33:00,540 --> 00:33:00,820 You might ask yourself, or I would ask myself, you know, would it be better to have that sweet-spot price around about $22 802 00:33:00,820 --> 00:33:05,180 would it be better to have that sweet-spot price around about $22 803 00:33:05,180 --> 00:33:07,180 and just sell it for $22 every day? 804 00:33:07,180 --> 00:33:11,380 The trouble with that is it would then just blend into everything else 805 00:33:11,380 --> 00:33:15,660 because it wouldn't have the nice, big, flashy ticket on it. 806 00:33:15,660 --> 00:33:18,060 You are attracted to those tickets. 807 00:33:18,060 --> 00:33:22,140 It helps to drive people into the supermarkets. 808 00:33:22,140 --> 00:33:25,740 It helps everyone feel that they're getting a better deal. 809 00:33:25,740 --> 00:33:28,540 So, how would you categorise a special? 810 00:33:28,540 --> 00:33:28,780 So, how would you categorise Oh...a little bit like a drug. 811 00:33:28,780 --> 00:33:31,260 Oh...a little bit like a drug. 812 00:33:35,460 --> 00:33:38,180 Behind the success of Coles and Woolworths 813 00:33:38,180 --> 00:33:42,460 is a workforce of more than 300,000 people. 814 00:33:42,460 --> 00:33:46,740 They are two of Australia's largest private-sector employers. 815 00:33:47,580 --> 00:33:50,460 But the announcement of record profits 816 00:33:50,460 --> 00:33:53,140 has caused friction on the shop floor. 817 00:33:55,620 --> 00:33:58,500 So, I've decided to get a few groceries on the way home 818 00:33:58,500 --> 00:33:58,740 So, I've decided to get through Coles Click&Collect. 819 00:33:58,740 --> 00:34:00,700 through Coles Click&Collect. 820 00:34:00,700 --> 00:34:00,940 Yep, here we are. through Coles Click&Collect. 821 00:34:00,940 --> 00:34:03,380 Yep, here we are. OK, going in here now. 822 00:34:12,620 --> 00:34:14,340 That was super easy. 823 00:34:14,340 --> 00:34:18,180 Drive in, two minutes later - groceries in the back of the car. 824 00:34:20,700 --> 00:34:22,500 But now I'm going to meet someone 825 00:34:22,500 --> 00:34:25,700 who quite possibly helped pick and pack my order. 826 00:34:25,700 --> 00:34:27,980 Hey! How are you? Hi. Good. How are you? 827 00:34:27,980 --> 00:34:29,420 How was your shift? Oh! Long. 828 00:34:29,420 --> 00:34:30,700 Yeah? Yeah, long. 829 00:34:30,700 --> 00:34:34,420 It's a stifling day, typical for this time of year. 830 00:34:34,420 --> 00:34:39,740 Ana tells me it's just as hot inside her store as it is out here. 831 00:34:39,740 --> 00:34:41,380 So, how hot did it get in there? 832 00:34:41,380 --> 00:34:41,580 It got up to 34, 35 degrees. Yeah. So, how hot did it get in there? 833 00:34:41,580 --> 00:34:44,220 It got up to 34, 35 degrees. Yeah. 834 00:34:44,220 --> 00:34:45,700 It was 34 degrees in there?! 835 00:34:45,700 --> 00:34:45,940 Yeah. 34. Yeah. At least. It was 34 degrees in there?! 836 00:34:45,940 --> 00:34:48,620 Yeah. 34. Yeah. At least. Wow. That must be uncomfortable. 837 00:34:48,620 --> 00:34:48,900 Yeah. 34. Yeah. At least. Wow. That must be uncomfortable. Yeah, it was. It was very uncomfortable. 838 00:34:48,900 --> 00:34:50,500 Yeah, it was. It was very uncomfortable. 839 00:34:50,500 --> 00:34:50,740 Yeah, it was. It makes your job harder to do. 840 00:34:50,740 --> 00:34:52,180 It makes your job harder to do. 841 00:34:53,140 --> 00:34:56,700 Where Ana works isn't any ordinary Coles supermarket. 842 00:34:56,700 --> 00:34:56,940 Where Ana works It's what's known as a 'dark store'. 843 00:34:56,940 --> 00:35:00,260 It's what's known as a 'dark store'. 844 00:35:00,260 --> 00:35:04,900 While it looks like a supermarket with aisles, a deli and bakery, 845 00:35:04,900 --> 00:35:05,140 While it looks like a supermarket there are no customers. 846 00:35:05,140 --> 00:35:06,540 there are no customers. 847 00:35:07,500 --> 00:35:12,660 Inside, dozens of staff fill orders for delivery or click and collect. 848 00:35:14,460 --> 00:35:18,660 These photos show just how hot it can get. 849 00:35:18,660 --> 00:35:20,500 Coles wouldn't expect its customers 850 00:35:20,500 --> 00:35:24,260 to endure temperatures of 34 degrees while they shop, 851 00:35:24,260 --> 00:35:27,380 but for staff this is just part of the job. 852 00:35:30,540 --> 00:35:32,780 I catch up with Ana again at home. 853 00:35:33,820 --> 00:35:36,420 Every summer there's people who feel dizzy. 854 00:35:36,420 --> 00:35:38,940 Every summer there's people whose sweat's just dripping off them 855 00:35:38,940 --> 00:35:40,420 and they want to sit down. 856 00:35:40,420 --> 00:35:43,980 But you get a 15-minute break in a five-hour shift, 857 00:35:43,980 --> 00:35:47,460 so, I think it's not really enough for... 858 00:35:47,460 --> 00:35:50,900 One 15-minute break doesn't really allow you time to recover 859 00:35:50,900 --> 00:35:54,460 and then go back to work and still keep up the same pace. 860 00:35:54,460 --> 00:35:57,300 The pace Ana's talking about is quick. 861 00:35:57,300 --> 00:36:01,420 Workers gathering items for online orders are timed 862 00:36:01,420 --> 00:36:01,660 Workers gathering items and there are targets set. 863 00:36:01,660 --> 00:36:03,900 and there are targets set. 864 00:36:03,900 --> 00:36:05,820 There is a industry standard of a pick rate 865 00:36:05,820 --> 00:36:06,060 There is a industry standard of about 180 items per hour. 866 00:36:06,060 --> 00:36:08,300 of about 180 items per hour. 867 00:36:08,300 --> 00:36:11,140 Our warehouse, particularly during busy periods, 868 00:36:11,140 --> 00:36:15,900 will push you to go above and beyond that, which might be 210, 220. 869 00:36:15,900 --> 00:36:20,460 In the past, they have displayed the names of pickers, um... 870 00:36:20,460 --> 00:36:23,820 ..where the ones who are falling behind the official pick rate 871 00:36:23,820 --> 00:36:24,060 ..where the ones who are falling will be displayed in red. 872 00:36:24,060 --> 00:36:25,500 will be displayed in red. 873 00:36:25,500 --> 00:36:25,740 How does it make you feel will be displayed in red. 874 00:36:25,740 --> 00:36:28,620 How does it make you feel being, effectively, publicly shamed 875 00:36:28,620 --> 00:36:28,860 How does it make you feel for not working hard enough? 876 00:36:28,860 --> 00:36:30,460 for not working hard enough? 877 00:36:30,460 --> 00:36:33,020 It's not fair to people with different abilities, 878 00:36:33,020 --> 00:36:36,220 different capabilities, different reasons 879 00:36:36,220 --> 00:36:38,140 for what speed they can maintain. 880 00:36:38,140 --> 00:36:40,300 We prioritise, 881 00:36:40,300 --> 00:36:40,500 um...team-member safety We prioritise, 882 00:36:40,500 --> 00:36:42,020 um...team-member safety 883 00:36:42,020 --> 00:36:46,540 as something that is absolutely crucial, uh...in our business. 884 00:36:46,540 --> 00:36:46,820 as something that is absolutely crucial, uh...in our business. And, so, ensuring that there is an environment, um... 885 00:36:46,820 --> 00:36:50,380 And, so, ensuring that there is an environment, um... 886 00:36:50,380 --> 00:36:53,700 ..including temperature, that is safe for our team member 887 00:36:53,700 --> 00:36:53,940 ..including temperature, would be something that, um... 888 00:36:53,940 --> 00:36:56,180 would be something that, um... 889 00:36:56,180 --> 00:36:58,020 ..we would definitely want to have a look at 890 00:36:58,020 --> 00:36:59,420 and understand why that has happened. 891 00:36:59,420 --> 00:36:59,660 and understand Is it acceptable 892 00:36:59,660 --> 00:37:00,980 Is it acceptable 893 00:37:00,980 --> 00:37:04,100 that your team members have to work in 35-degree heat? 894 00:37:04,100 --> 00:37:06,620 And what I've said is I will take away that issue 895 00:37:06,620 --> 00:37:10,140 and we will have a look at it because it doesn't sound right. 896 00:37:11,980 --> 00:37:14,220 After the interview with Four Corners, 897 00:37:14,220 --> 00:37:17,100 Coles said it had put measures in place 898 00:37:17,100 --> 00:37:19,340 to help employees on hot days, 899 00:37:19,340 --> 00:37:23,140 including providing them with chilled neckties. 900 00:37:23,140 --> 00:37:26,300 Oh, nice! Yeah, cool, I'm here for support. 901 00:37:26,300 --> 00:37:26,540 Oh, nice! Oh, yeah! That's great. 902 00:37:26,540 --> 00:37:28,500 Oh, yeah! That's great. 903 00:37:28,500 --> 00:37:28,740 Ana is part of the first national Oh, yeah! That's great. 904 00:37:28,740 --> 00:37:32,340 Ana is part of the first national strike by supermarket workers 905 00:37:32,340 --> 00:37:32,580 Ana is part of the first national in Australian history. 906 00:37:32,580 --> 00:37:34,340 in Australian history. 907 00:37:35,300 --> 00:37:37,220 PROTESTER: What do we want?! PROTESTERS: A living wage! 908 00:37:37,220 --> 00:37:38,820 When do we want it?! Now! 909 00:37:38,820 --> 00:37:41,340 They walked off the job several times last year 910 00:37:41,340 --> 00:37:43,980 asking for better wages and conditions. 911 00:37:43,980 --> 00:37:45,660 When do we want it?! Now! 912 00:37:49,020 --> 00:37:52,420 Coles is not just putting pressure on staff and suppliers. 913 00:37:52,420 --> 00:37:52,660 Coles is not just putting pressure There's a whole other area 914 00:37:52,660 --> 00:37:54,220 There's a whole other area 915 00:37:54,220 --> 00:37:54,460 where the supermarket giant is taking There's a whole other area 916 00:37:54,460 --> 00:37:58,380 where the supermarket giant is taking advantage of its market power. 917 00:37:58,380 --> 00:38:02,020 It's using this power to push its own products 918 00:38:02,020 --> 00:38:02,260 It's using this power without being upfront with consumers. 919 00:38:02,260 --> 00:38:04,860 without being upfront with consumers. 920 00:38:07,860 --> 00:38:09,460 You may not realise it, 921 00:38:09,460 --> 00:38:12,900 but Coles is a big player in wine. 922 00:38:16,100 --> 00:38:20,820 I've come to the Coles-owned Vintage Cellars to pick up a bottle of red. 923 00:38:20,820 --> 00:38:22,700 There's no shortage of choice, 924 00:38:22,700 --> 00:38:27,420 but, like many consumers, I go for a mid-price wine at eye level. 925 00:38:27,420 --> 00:38:27,660 but, like many consumers, I go Just that one, thanks. 926 00:38:27,660 --> 00:38:28,940 Just that one, thanks. 927 00:38:31,900 --> 00:38:33,340 So, I decided on this one - 928 00:38:33,340 --> 00:38:35,580 the Two Churches Preacher Shiraz. 929 00:38:35,580 --> 00:38:37,060 I really like the label, 930 00:38:37,060 --> 00:38:40,660 but what really got me was the story on the back. 931 00:38:40,660 --> 00:38:43,500 (DRAMATIC MUSIC PLAYS) 932 00:38:43,500 --> 00:38:48,060 It tells a tale of German immigrants coming to South Australia, 933 00:38:48,060 --> 00:38:48,300 It tells a tale of German immigrants of two Lutheran priests who fell out 934 00:38:48,300 --> 00:38:50,660 of two Lutheran priests who fell out 935 00:38:50,660 --> 00:38:55,460 and built rival churches at opposite ends of the same village. 936 00:38:56,660 --> 00:39:00,020 Online it's promoted as a tale from the Barossa Valley, 937 00:39:00,020 --> 00:39:03,020 where the priests disagreed on almost everything 938 00:39:03,020 --> 00:39:07,700 except the quality of grapes grown in the now-famous wine region. 939 00:39:14,660 --> 00:39:19,180 So, I'm here in the Barossa to find out where these grapes are grown. 940 00:39:19,180 --> 00:39:19,420 So, I'm here in the Barossa to find There it is. 941 00:39:19,420 --> 00:39:21,180 There it is. 942 00:39:32,860 --> 00:39:35,580 So, this is it, the Light Pass Immanuel Church, 943 00:39:35,580 --> 00:39:35,820 So, this is it, just like on the bottle here, 944 00:39:35,820 --> 00:39:37,340 just like on the bottle here, 945 00:39:37,340 --> 00:39:40,140 and over there - that's the rival church. 946 00:39:40,140 --> 00:39:40,380 and over there - It's just such a great story. 947 00:39:40,380 --> 00:39:41,540 It's just such a great story. 948 00:39:42,500 --> 00:39:45,140 (BIRDS TWITTER) 949 00:39:45,140 --> 00:39:47,820 Is this the home of Two Churches? 950 00:39:47,820 --> 00:39:50,860 I couldn't tell you that from this bottle. 951 00:39:50,860 --> 00:39:54,220 Adrian Hoffmann is a fifth-generation grape grower from the Barossa 952 00:39:54,220 --> 00:39:58,500 and says there's no Two Churches vineyard around here. 953 00:39:58,500 --> 00:40:01,940 I think they're sort of misleading the consumer to a certain degree. 954 00:40:01,940 --> 00:40:02,180 I think they're sort of misleading It sounds like a Barossa story, 955 00:40:02,180 --> 00:40:03,420 It sounds like a Barossa story, 956 00:40:03,420 --> 00:40:03,660 but, um...yeah, It sounds like a Barossa story, 957 00:40:03,660 --> 00:40:05,540 but, um...yeah, you can't be guaranteed 958 00:40:05,540 --> 00:40:08,060 it's Barossa fruit, unfortunately, so... 959 00:40:08,060 --> 00:40:10,300 So, where is the home of Two Churches wine? 960 00:40:10,300 --> 00:40:12,900 And what about the address on the back? What does that tell me? 961 00:40:12,900 --> 00:40:14,500 Well, that's the first thing I'd sort of go to. 962 00:40:14,500 --> 00:40:14,740 Well, that's the first thing You look at where it's produced. 963 00:40:14,740 --> 00:40:15,980 You look at where it's produced. 964 00:40:15,980 --> 00:40:18,900 And this says it's Hawthorn East, Victoria. 965 00:40:29,660 --> 00:40:32,180 So, here I am in suburban Melbourne. 966 00:40:32,180 --> 00:40:34,180 Turns out this is the closest there is 967 00:40:34,180 --> 00:40:37,060 to a home for the Two Churches Shiraz. 968 00:40:37,060 --> 00:40:40,420 Not that it says Coles anywhere on the bottle. 969 00:40:40,420 --> 00:40:44,860 Coles says it has around 260 private label wines 970 00:40:44,860 --> 00:40:45,100 Coles says it has available through its liquor stores. 971 00:40:45,100 --> 00:40:47,380 available through its liquor stores. 972 00:40:48,380 --> 00:40:50,980 ROD SIMS: I mean, the test under law is 973 00:40:50,980 --> 00:40:51,260 would a reasonable consumer be misled? ROD SIMS: I mean, the test under law is 974 00:40:51,260 --> 00:40:53,140 would a reasonable consumer be misled? 975 00:40:53,140 --> 00:40:53,380 would a reasonable consumer Now, if on the label of the bottle 976 00:40:53,380 --> 00:40:55,620 Now, if on the label of the bottle 977 00:40:55,620 --> 00:40:57,540 you're telling a story 978 00:40:57,540 --> 00:40:57,740 you're telling a story that's unrelated to the product, 979 00:40:57,740 --> 00:41:00,260 that's unrelated to the product, 980 00:41:00,260 --> 00:41:04,860 then I think that runs a serious risk of being misleading. 981 00:41:04,860 --> 00:41:05,100 then I think that runs Why not put your name on it? 982 00:41:05,100 --> 00:41:05,940 Why not put your name on it? 983 00:41:05,940 --> 00:41:09,660 Why not say it's Coles Chardy or Supermarket Shiraz? 984 00:41:09,660 --> 00:41:13,020 Why are you hiding the fact that you own this brand? 985 00:41:13,020 --> 00:41:13,300 So, in terms of communicating with customers, Why are you hiding the fact that you own this brand? 986 00:41:13,300 --> 00:41:17,660 So, in terms of communicating with customers, 987 00:41:17,660 --> 00:41:21,580 there are practices across many retailers and many industries 988 00:41:21,580 --> 00:41:21,860 there are practices across many retailers and many industries where brand... Take that point - 989 00:41:21,860 --> 00:41:23,340 where brand... Take that point - 990 00:41:23,340 --> 00:41:25,340 shouldn't you say...shouldn't you be honest with the consumer 991 00:41:25,340 --> 00:41:25,580 shouldn't you say...shouldn't and say, "This is a Coles wine"? 992 00:41:25,580 --> 00:41:28,460 and say, "This is a Coles wine"? 993 00:41:28,460 --> 00:41:30,220 But WHY do it? 994 00:41:30,220 --> 00:41:33,340 We're very comfortable that the branding approach 995 00:41:33,340 --> 00:41:34,980 that we have in our liquor brands 996 00:41:34,980 --> 00:41:38,020 is one that resonates with customers. 997 00:41:38,020 --> 00:41:38,260 is one that resonates After our interview, 998 00:41:38,260 --> 00:41:39,700 After our interview, 999 00:41:39,700 --> 00:41:42,940 Coles removed any reference to the Barossa 1000 00:41:42,940 --> 00:41:46,420 from its online promotion of Two Churches. 1001 00:41:51,340 --> 00:41:55,100 From prime shelf space to prime real estate, 1002 00:41:55,100 --> 00:41:55,340 From prime shelf space there's a more fundamental issue 1003 00:41:55,340 --> 00:41:56,860 there's a more fundamental issue 1004 00:41:56,860 --> 00:41:57,100 stifling competition there's a more fundamental issue 1005 00:41:57,100 --> 00:42:00,100 stifling competition in this country - 1006 00:42:00,100 --> 00:42:00,340 stifling competition access to land. 1007 00:42:00,340 --> 00:42:02,580 access to land. 1008 00:42:02,580 --> 00:42:05,900 An industry insider has told Four Corners 1009 00:42:05,900 --> 00:42:10,500 about a tactic used to keep competitors out. 1010 00:42:10,500 --> 00:42:13,900 It involves buying up so-called spoiler sites 1011 00:42:13,900 --> 00:42:14,140 It involves buying up right across the country. 1012 00:42:14,140 --> 00:42:15,900 right across the country. 1013 00:42:15,900 --> 00:42:20,020 A prime example is on Sydney's Upper North Shore. 1014 00:42:20,980 --> 00:42:23,300 Woolworths has spent almost a decade 1015 00:42:23,300 --> 00:42:26,300 trying to redevelop this council car park 1016 00:42:26,300 --> 00:42:29,700 into a shopping centre and supermarket. 1017 00:42:29,700 --> 00:42:32,100 In exchange for access to the land 1018 00:42:32,100 --> 00:42:37,180 Woolworths is offering to build a new library and community hall. 1019 00:42:37,180 --> 00:42:37,420 Woolworths is offering to build It's already purchased three shops. 1020 00:42:37,420 --> 00:42:40,740 It's already purchased three shops. 1021 00:42:40,740 --> 00:42:42,820 If Woolworths gets the green light, 1022 00:42:42,820 --> 00:42:43,060 they'll be part If Woolworths gets the green light, 1023 00:42:43,060 --> 00:42:46,420 they'll be part of the new shopping complex. 1024 00:42:46,420 --> 00:42:51,620 But they also have the added benefit of keeping rivals out. 1025 00:42:52,820 --> 00:42:54,940 ROD SIMS: Oh, look, it's a huge problem, 1026 00:42:54,940 --> 00:42:56,980 but you can understand why it's happened. 1027 00:42:56,980 --> 00:42:57,220 but you can understand Coles and Woolworths 1028 00:42:57,220 --> 00:42:58,620 Coles and Woolworths 1029 00:42:58,620 --> 00:43:03,340 want to maintain as concentrated a market as possible. 1030 00:43:03,340 --> 00:43:07,220 There's no doubt it's aimed at reducing competition. 1031 00:43:07,220 --> 00:43:11,820 So, therefore you can say it's anti-competitive in that sense. 1032 00:43:11,820 --> 00:43:12,060 So, therefore you can say Proving that is tricky. 1033 00:43:12,060 --> 00:43:15,540 Proving that is tricky. 1034 00:43:18,140 --> 00:43:22,100 Does Woolworths use land acquisition or land banking 1035 00:43:22,100 --> 00:43:24,340 as a way to reduce competition? 1036 00:43:24,340 --> 00:43:27,380 BRAD BANDUCCI: So, that's not something that we actively do. 1037 00:43:27,380 --> 00:43:27,620 BRAD BANDUCCI: So, that's not We do, in some cases buy land. 1038 00:43:27,620 --> 00:43:29,180 We do, in some cases buy land. 1039 00:43:29,180 --> 00:43:29,420 This is one of the pieces of land we've bought and developed. We do, in some cases buy land. 1040 00:43:29,420 --> 00:43:32,340 This is one of the pieces of land we've bought and developed. 1041 00:43:32,340 --> 00:43:35,340 Uh... But it's not a way of trying to drive competition. 1042 00:43:35,340 --> 00:43:35,580 Uh... But it's not a way It'll be through, 1043 00:43:35,580 --> 00:43:36,820 It'll be through, 1044 00:43:36,820 --> 00:43:37,020 It'll be through, "We need a store in a new area," 1045 00:43:37,020 --> 00:43:38,340 "We need a store in a new area," 1046 00:43:38,340 --> 00:43:40,460 and, so, you'll buy some land 1047 00:43:40,460 --> 00:43:40,700 and wait for the community and, so, you'll buy some land 1048 00:43:40,700 --> 00:43:44,060 and wait for the community to start moving into the area. 1049 00:43:45,260 --> 00:43:50,460 German supermarket giant Kaufland would likely disagree. 1050 00:43:50,460 --> 00:43:54,740 It halted plans to open supermarkets here in 2020. 1051 00:43:54,740 --> 00:44:00,420 A lack of suitable locations was cited as one of the reasons. 1052 00:44:00,420 --> 00:44:00,660 A lack of suitable locations (ENGINES ROAR) 1053 00:44:00,660 --> 00:44:03,060 (ENGINES ROAR) 1054 00:44:08,700 --> 00:44:11,500 The government is making all the right noises 1055 00:44:11,500 --> 00:44:14,700 about tackling the power of Coles and Woolworths. 1056 00:44:15,660 --> 00:44:18,660 Our government is prepared to take action 1057 00:44:18,660 --> 00:44:20,980 to make sure that Australians 1058 00:44:20,980 --> 00:44:21,220 to make sure that Australians are not paying $1 more than they should 1059 00:44:21,220 --> 00:44:24,660 are not paying $1 more than they should 1060 00:44:24,660 --> 00:44:24,900 are not paying $1 more for the things that they need. 1061 00:44:24,900 --> 00:44:26,580 for the things that they need. 1062 00:44:26,580 --> 00:44:26,820 All of these processes are about one thing, for the things that they need. 1063 00:44:26,820 --> 00:44:29,420 All of these processes are about one thing, 1064 00:44:29,420 --> 00:44:32,380 and that's about seeing if we can exert more competition. 1065 00:44:33,340 --> 00:44:36,060 But, to actually bring down prices, 1066 00:44:36,060 --> 00:44:37,860 it will need to implement reform 1067 00:44:37,860 --> 00:44:38,100 that previous governments it will need to implement reform 1068 00:44:38,100 --> 00:44:41,100 that previous governments have ignored. 1069 00:44:43,500 --> 00:44:45,980 Former Competition boss, Rod Sims, 1070 00:44:45,980 --> 00:44:50,340 says the ACCC needs greater powers to block mergers, 1071 00:44:50,340 --> 00:44:51,900 making it harder for the big two 1072 00:44:51,900 --> 00:44:57,700 to gobble up rivals, buy land and move into other industries. 1073 00:44:57,700 --> 00:45:00,780 I think there's no doubt if you want lower supermarket prices, 1074 00:45:00,780 --> 00:45:04,380 if you want consumers to pay less for goods in supermarkets, 1075 00:45:04,380 --> 00:45:05,740 change the merger laws. 1076 00:45:07,300 --> 00:45:10,620 The Greens, who are chairing the upcoming Senate inquiry, 1077 00:45:10,620 --> 00:45:10,860 The Greens, who are chairing are exploring more radical change, 1078 00:45:10,860 --> 00:45:13,180 are exploring more radical change, 1079 00:45:13,180 --> 00:45:13,420 including breaking up are exploring more radical change, 1080 00:45:13,420 --> 00:45:17,140 including breaking up Coles and Woolworths. 1081 00:45:17,140 --> 00:45:17,380 including breaking up The acid test on the Prime Minister 1082 00:45:17,380 --> 00:45:20,540 The acid test on the Prime Minister 1083 00:45:20,540 --> 00:45:20,780 is not going to be what reviews or what processes The acid test on the Prime Minister 1084 00:45:20,780 --> 00:45:24,740 is not going to be what reviews or what processes 1085 00:45:24,740 --> 00:45:24,980 is not going to be he's prepared to put in place. 1086 00:45:24,980 --> 00:45:26,620 he's prepared to put in place. 1087 00:45:26,620 --> 00:45:26,860 he's prepared to put in place. It'll be what action he is prepared to take. 1088 00:45:26,860 --> 00:45:29,460 It'll be what action he is prepared to take. 1089 00:45:35,980 --> 00:45:37,460 Whatever happens, 1090 00:45:37,460 --> 00:45:41,980 it's already too late for cherry grower Michael Cunial. 1091 00:45:43,860 --> 00:45:46,780 So, what do you do? Do you literally put the bulldozer through here? 1092 00:45:46,780 --> 00:45:49,500 We just get our bulldozer and start pushing. 1093 00:45:49,500 --> 00:45:49,740 We just get our bulldozer Yeah. 1094 00:45:49,740 --> 00:45:50,740 Yeah. 1095 00:45:50,740 --> 00:45:52,140 Just push them up into piles. 1096 00:45:56,540 --> 00:45:58,220 I don't mind people making money. 1097 00:45:58,220 --> 00:46:01,220 Everyone's got to make a little bit of money on the way through. 1098 00:46:01,220 --> 00:46:03,940 But they're just making so much. 1099 00:46:03,940 --> 00:46:06,500 It's getting to the point, you know, 1100 00:46:06,500 --> 00:46:09,140 the industry can't absorb their greed. 1101 00:46:11,020 --> 00:46:13,260 I don't know what the answer is. 1102 00:46:13,260 --> 00:46:19,420 I'd like to know it because we would keep reinvesting in our orchards. 1103 00:46:19,420 --> 00:46:19,660 I'd like to know it because we would But... 1104 00:46:19,660 --> 00:46:21,380 But... 1105 00:46:21,380 --> 00:46:24,060 ..I can't see a huge silver lining, 1106 00:46:24,060 --> 00:46:25,380 so, we're out. 1107 00:46:25,380 --> 00:46:27,780 We're just getting out. Yep. 1108 00:46:31,180 --> 00:46:33,220 (THEME MUSIC PLAYS) 1109 00:46:48,420 --> 00:46:50,420 Captions by Red Bee Media 1110 00:46:50,420 --> 00:46:50,660 Copyright Australian Broadcasting Corporation Captions by Red Bee Media 1111 00:46:50,660 --> 00:46:52,620 Copyright Australian Broadcasting Corporation