COLES boss Ian McLeod has defended its treatment of suppliers, saying it is in the supermarket's interest to have a strong Australian agricultural sector and to retain brands sought by shoppers.
''There's obviously a lot of talk out there in relation to us single-handedly undermining and destroying Australian agriculture and the Australian dairy industry,'' Mr McLeod told an Australian British Chamber of Commerce lunch yesterday.
''I don't believe that holds water ... What we want to do is make sure that we have strong, rich, growing Australian agriculture, and we're working along with farmers in their fields in developing and growing new products.''
Relations between suppliers and supermarkets came into focus recently when The Age revealed that scores of suppliers to larger rival Woolworths had complained of being asked for price cuts of up to 10 per cent or risk having their products pulled from the shelves.
Concerns have also been raised about the effect on Australian food manufacturing of the supermarket duopoly's heavy promotion of private-label products, and the long-term consequences of pricing milk at $1 a litre.
International food company HJ Heinz last year described Australia's food market as the worst in the world.
But Mr McLeod said Coles was not ''taking favoured brands off the shelves''. Instead, it was shunning brands that had not invested in innovation or engendered loyalty, he said.
''I think that what we've done is look to the hierarchy of products, and where you've got strong brands that suppliers continue to invest in, then we'll continue to support them,'' he said.
''Where you get three or four brands that really haven't invested in innovation … all they've done is basically put them on special every week, you end up with volatility. What people are doing is buying on price.''
He also signalled no end to skittish consumer sentiment and cautious spending.
''Consumer sentiment is still low and it's still concerning. It might be higher relative to others, but from where it has been, it's probably at one of the lowest levels it has been for some considerable time,'' he said.
Speaking in the final year of a ''turnaround'' program after Wesfarmers' $20 billion purchase of Coles in 2007, Mr McLeod said Coles' future growth would come from Australia, not overseas, and comprise multi-channel retailing, different product categories, and changing store formats.
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