Future fears for food producers

The extent of market domination by Woolworths and Coles has a former supermarket boss fearing for the future of Australia’s food producers.

Woolworths chief executive from 1993 to 1998, Reg Clairs, has said he is worried the changes in the industry may force local manufacturers out, leaving a handful of global suppliers dominant.

“I am immensely worried about the ultimate destiny of a lot of food manufacturers in this … country,” Clairs said in an interview with ABC1’s Four Corners.

“Globally, we are seeing the growth of the majors and unless we are able to build a food manufacturing business in Australia that is sustainable, then ultimately, the global manufacturers will take the power base.”

Both Coles and Woolworths have been accused in the past of using “creeping acquisition” to enlarge their already massive domination of the market.

Clairs concern is that the smaller suppliers are being “squeezed out of the industry,” leading to concerns for what will happen “over the next 10 or 15 years, in that it’s a cycle that comes and goes. Who knows? In 10 or 15 years’ time there may be a handful of global manufacturers that win back that power base and that’s a frightening thought.”

Clairs’s comments come after the Australian Competition and Consumer Commission’s inquiry into the grocery sector.

The federal Minister for Consumer Affairs, Chris Bowen, has responded to the inquiry by releasing a discussion paper looking at the possible introduction of creeping acquisition laws.

“Consideration of the need for legislative reform in relation to creeping acquisitions is an election commitment, and the release of this discussion paper is an important step in ensuring that all the issues can be examined,” Bowen said in a statement.

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