Coles chief admits ‘underpricing’ items; Woolies boss threatened with jail


The chief executive of Coles has admitted the supermarket giant had let down its suppliers following claims the company was underpricing the wholesale value of goods.

Apr 16, 2024, updated Apr 16, 2024
Coles Group CEO Leah Weckert is seen during a discussion at the Australian Financial Review Business Summit, in Sydney, Tuesday, March 12, 2024. (AAP Image/Bianca De Marchi) NO ARCHIVING

Coles Group CEO Leah Weckert is seen during a discussion at the Australian Financial Review Business Summit, in Sydney, Tuesday, March 12, 2024. (AAP Image/Bianca De Marchi) NO ARCHIVING

Speaking before a Senate inquiry into supermarket prices, Coles boss Leah Weckert said the chain needed to improve its relationships with suppliers.

It comes following previous allegations at the inquiry that supermarket giants were paying prices for goods to primary producers well below market value.

“Claims have been made about how we interact with our suppliers, we acknowledge that we don’t always get it right, but all of our procedures seek to ensure fair and sustainable relationships,” she told the inquiry on Tuesday.

“We acknowledge some of the concerns that have been raised by the farming sector, particularly the horticultural sector, around price transparency.

“Coles would be very willing to be part of a solution that would involve greater transparency for fresh produce.”

The inquiry was previously told suppliers were hesitant to speak out about the relationship with major supermarkets for fear of retribution or loss of contract.

Ms Weckert said Coles was looking to put in place measures to improve relationships with suppliers.

Earlier Woolworths chief executive Brad Banducci was in the firing line of the inquiry after being threatened with a six-month prison sentence for failing to answer questions on profits.

Mr Banducci was asked repeatedly during the hearing to disclose Woolworths’ return on equity, a key measure of the company’s profitability.

Instead, the chief executive declined focusing on the company’s return on investment.

“We measure return on investment, which we think is the right way of measuring profitability in a company,” he said.

Inquiry chair and Greens senator Nick McKim warned Mr Banducci a failure to answer the question directly may lead him to being held in contempt by the Senate.

Such a charge comes with a fine of up to $5000 and a possible prison sentence of six months.

The failure to disclose the answer led to the inquiry being forced to suspend its hearing for several minutes.

While the chief executive avoided being held in contempt, Mr Banducci didn’t provide the full number, admitting he did not know the figure.

“I don’t focus on it, it’s not the numbers that drive our industry. The way our industry should be assessed is the total return on investment and total shareholder return,” he said.

“If it helps the committee in terms of us moving on, I don’t know that number.”

The profit margins of major supermarkets has come under scrutiny at the inquiry, with Woolworths and Coles being accused of price gouging.

Woolworths made a $1.7 billion profit after tax in the most recent financial year.

Senator McKim accused Mr Banducci of cherrypicking data surrounding the supermarket’s profits.

“Honestly, I’m not interested in your spin or your bulls***. This is a Senate inquiry. Answer the question.

“You’ve used this market dominance to put the squeeze on your suppliers, including farmers, to force down wages, to compromise staff safety and to price gouge your customers.”

Earlier, Mr Banducci denied Woolworths was price gouging.

“It’s very hard to say that we have price gouging,” he said.

“I would respectfully submit that this is an incredibly competitive market and that is good for consumers.”

The inquiry comes as a review into the voluntary food and grocery code of conduct, which governs the relationship between supermarkets and suppliers, recommended it be made mandatory, with significant financial penalties for breaches.

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