Nestlé, Coca-Cola could face the music on grocery prices

“I would be more than happy to hear evidence from multinational corporations about their role in the soaring price of groceries in Australia,” he said.

“It is also good to see that Coles and Woolworths have admitted that having a dominant market position can give corporations significant advantage when it comes to negotiating contracts and prices.”

WA Labor senator Louise Pratt said the committee would seek to hear from multinationals, as well as those who can shed light about their pricing practices. “It is important to the committee to understand if price increases are based on real cost increases, or if they are taking extra profits at the expense of consumers.”

WA Liberal senator Dean Smith said the inquiry needed to be “all-encompassing” to be credible.

“As multinationals are a large component of supermarket price structures, we would expect them to appear before the inquiry,” he said. “We also note the ACCC’s ongoing Supermarkets Inquiry, which is expected to provide a thorough analysis of this issue in the near future.”

The largest 100 suppliers of Woolworths are responsible for more than 80 per cent of all price increases, according to the supermarket’s submission to Dr Craig Emerson’s review of the food and grocery code of conduct. “Must-have brands” sold by multinational giants account for over 60 per cent of its sales in 2023.

Nestlé and Mondelez International, which make brands like Cadbury, Oreo, Toblerone and Philadelphia cream cheese, have indicated to this masthead they are prepared to cooperate with the inquiry if called.

Multinational food producers are represented by the Australian Food and Grocery Council (AFGC), which made submissions on their behalf.

AFGC chief executive Tanya Barden, who appeared before the inquiry on Monday, said food producers of all sizes have faced the same inflation and cost pressures over the past 15 years, well before the pandemic and geopolitical tensions further exacerbated inflation, and are usually not passing on the full costs to the consumer.

“There was no fat left in the system because of the previous decade when suppliers – multinational and domestically owned – were so squeezed,” Barden told this masthead.

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“In the last few years, all businesses have needed to pass through some of the extra costs in order to maintain viability. I think the only difference for a multinational is that they’ve got the option of shutting up shop and moving offshore if they can’t have a viable domestic business.”

Barden batted away suggestions that multinationals that make “must-have brands” have more bargaining power with retailers.

“There’s healthy commercial tension in price negotiations all the time between all food and grocery companies and retailers with respect to big brands. They’re not using those brands to hold the retailers over a barrel,” she said.

“The risk is that we end up importing more of those products and not having the jobs to manufacture them in Australia. The retailer can and does say no to a price increase.”

However, Australian Retailers Association chief executive Paul Zahra said many consumers are very loyal to certain brands, such as Coca-Cola or Tim Tams, and unwilling to purchase alternatives. He disagreed with Barden’s dismissal of Woolworths’ claim that multinationals are willing to withhold stock during price negotiations.

“That comes down to a play on words,” Zahra said. “If supermarkets don’t accept the price increase, they’ve got no option but not to buy the stock. Well that’s not a great customer outcome,” he said.

The ACCC’s separate inquiry into supermarkets’ pricing practices must examine the role of multinationals in the grocery supply chain more closely, Zahra added.

“You can’t have a complete investigation or inquiry without having all the information … we need to see more transparency of all factors contributing to grocery prices.”

A Mondelez International spokesperson said the company was proud to have long-standing relationships with customers and farmers.

A representative for Coca-Cola Europacific Partners said the company was always mindful of keeping products affordable for customers and consumers.

“We have long-standing successful partnerships with our retail customers, built on conducting our business relationship in a fair and equitable manner.”

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