Latest / The Front / The beloved Australian treats getting jammed

Transcript

The beloved Australian treats getting jammed · The Front

• 0:05
  Speaker 1: From the Australian. Here's what's on the front. I'm Claire Harvey.
• 0:08
  Speaker 1: It's Monday, April twenty twenty twenty six. Small business owners,
• 0:15
  Speaker 1: tradees and farmers are asking the Treasurer for a huge
• 0:18
  Speaker 1: cut to red tape and compliance costs in the May budget.
• 0:22
  Speaker 1: They say even a cafe owner needs dozens of licenses
• 0:26
  Speaker 1: and certificates before they can make a single flat white.
• 0:32
  Speaker 1: Ben Robert Smith's lawyers are considering an application to permanently
• 0:36
  Speaker 1: stay his prosecution for five alleged war crime murders, with
• 0:40
  Speaker 1: the argument to be the former Special Forces soldier can't
• 0:43
  Speaker 1: get a fair trial because of all the media attention
• 0:46
  Speaker 1: in his case. Those stories are live now at the
• 0:49
  Speaker 1: Australian dot com dot au. As the Iran War sends
• 0:55
  Speaker 1: costs soaring, Woolies is telling its suppliers farmers and food
• 0:59
  Speaker 1: producers they can't lift shelf prices. Cole's is temporarily paying
• 1:04
  Speaker 1: struggling dairy farmers. More, both supermarket giants are fighting off
• 1:08
  Speaker 1: legal action by the regulator over allegedly fake discounting, with
• 1:13
  Speaker 1: Woolly's case to hit the Federal court this week. So
• 1:16
  Speaker 1: who gets jammed? Our story starts with a much loved
• 1:20
  Speaker 1: Australian company, feeling the.
• 1:22
  Speaker 2: Pain and like every good yard, it's true. It's Bunderberg's
• 1:35
  Speaker 2: Queens Lamps Australias, the world's great Australian brew.
• 1:43
  Speaker 1: Eli Greenblatt is a senior business reporter with The Australian ELI.
• 1:47
  Speaker 1: You had a story which really got our audience paying attention.
• 1:50
  Speaker 1: It was about one of Australia's most beloved drinks makers, Bunderberg,
• 1:55
  Speaker 1: which produces gingerbeer.
• 1:57
  Speaker 3: That kind of thing, well, bunderboog gingabear gets its name
• 2:00
  Speaker 3: because it's from Bunderberg, contains fresh ginger and is traditionally brude,
• 2:04
  Speaker 3: just like regular beer. But if we made it any
• 2:07
  Speaker 3: other way, it just wouldn't be Bunderberg ginger beer.
• 2:09
  Speaker 1: But I love Bunderberg ginger beer, I must admit, and
• 2:13
  Speaker 1: so to my kids. But their innoviti of strife, Why.
• 2:17
  Speaker 4: Yes, we love Bunderberg ginger beer too, so much as
• 2:20
  Speaker 4: the country and increasingly overseas. And the problem for them
• 2:23
  Speaker 4: is their expenses are just out of control, flowing from
• 2:27
  Speaker 4: the war in Middle East, the war with Iran. They
• 2:30
  Speaker 4: rely heavily on fuel, on diesel. You can imagine that
• 2:33
  Speaker 4: their factory that they're brewing site is up in Bunderberg
• 2:37
  Speaker 4: in regional Queensland. They need to get their gingerbeer all
• 2:41
  Speaker 4: over the country, so as far as Western Australia and overseas,
• 2:45
  Speaker 4: diesel touches every part of their business. Their expenses. Their
• 2:49
  Speaker 4: diesel expense alone has gone up almost forty percent and
• 2:53
  Speaker 4: they need to claw back some of those costs. Now.
• 2:56
  Speaker 4: The only way they can claw it back is by
• 2:59
  Speaker 4: charging the supermarkets more, the main sellers of their ginger beer.
• 3:04
  Speaker 4: And then you would think the supermarkets could pass on
• 3:07
  Speaker 4: those costs to customers. But in this environment, in a
• 3:10
  Speaker 4: highly inflationary environment, with the cost of living crisis, it's
• 3:15
  Speaker 4: very hard, or the supermarkets believe anyway, it's very hard
• 3:18
  Speaker 4: to pass on those costs. So for a producer like
• 3:22
  Speaker 4: Bunderberg and many other producers, many other food and grocery suppliers,
• 3:27
  Speaker 4: they're facing exploding costs because of the war in Iran.
• 3:32
  Speaker 4: They need to call those costs back, but the people
• 3:35
  Speaker 4: they sell to are quite reluctant. They're pushing back and
• 3:39
  Speaker 4: that's a big problem for them.
• 3:41
  Speaker 1: It's interesting though, in this conversation il I always think
• 3:43
  Speaker 1: where we talk about the supplies being squeezed and their
• 3:46
  Speaker 1: relationship with the retailers who are very powerful. And then
• 3:49
  Speaker 1: we talk about the retailers potentially being reluctant to pass
• 3:52
  Speaker 1: price rises onto the customer because they're worried about, of course,
• 3:54
  Speaker 1: about market share. But both the major supermarkets in Australia,
• 3:58
  Speaker 1: Coles and Wilworths, make more than a billion dollars profit
• 4:01
  Speaker 1: per annum. Why can they not just absorb more of
• 4:05
  Speaker 1: these price rises in the interests of maintaining their market share?
• 4:09
  Speaker 4: You know, the supermarkets are seen as very strong. And
• 4:11
  Speaker 4: let's talk about Coals and Woolworths. Yes, they're profitable. I
• 4:14
  Speaker 4: wouldn't say they're highly profitable. They're not as profitable perhaps
• 4:17
  Speaker 4: as iron all miners or gold mines at the moment,
• 4:21
  Speaker 4: or some tech companies. Their profit actually is quite conservative,
• 4:25
  Speaker 4: it's quite reasonable in the scheme of things compared to
• 4:28
  Speaker 4: other companies. And yes, they make billions, but they also
• 4:32
  Speaker 4: have tens of billions in sales, and then billions of
• 4:36
  Speaker 4: dollars in costs for themselves, hundreds of thousands of staff,
• 4:40
  Speaker 4: it distribution, warehousing, They need to open stores, they need
• 4:44
  Speaker 4: to refurbish stores, so their profit margin, what's left at
• 4:48
  Speaker 4: the end of the day is maybe a few cents
• 4:52
  Speaker 4: in the dollar. Now, the problem for Coals and Woolworths,
• 4:55
  Speaker 4: and I'm not saying we should feel sorry for them,
• 4:57
  Speaker 4: but certainly their problem, their conundrum is they're kind of
• 5:00
  Speaker 4: stuck in the middle where they have to balance their
• 5:04
  Speaker 4: duty to their own staff, so to pay them properly,
• 5:08
  Speaker 4: they have to pay their suppliers so their suppliers can
• 5:11
  Speaker 4: stay in business. They have to have a return for
• 5:14
  Speaker 4: their shareholders, so their shareholders continue to invest in them.
• 5:18
  Speaker 4: They have to invest money back into the business, so
• 5:21
  Speaker 4: new distribution centers, new transport, new supply chains, refurbishments. They
• 5:27
  Speaker 4: also have to sell the product at a reasonable price
• 5:30
  Speaker 4: for customers, so they keep on coming back. So then
• 5:34
  Speaker 4: the problem comes. For example, let's say in one instance
• 5:38
  Speaker 4: they and will use Bunderberg ginger beer as an example.
• 5:42
  Speaker 4: Let's say they pass on those higher costs incurred by
• 5:47
  Speaker 4: gingerbeer to their shoppers. Well, the shoppers will stop buying
• 5:51
  Speaker 4: although by lets. So that means if the sales are down,
• 5:54
  Speaker 4: their profits are down, so their return to their shareholders falls.
• 5:59
  Speaker 4: They have less money to reinvest in their staff for
• 6:03
  Speaker 4: the training of their staff. They have less money to
• 6:05
  Speaker 4: invest in refurbishments, they have less money to pay for wages.
• 6:09
  Speaker 4: So that causes kind of a cascading problem all the
• 6:12
  Speaker 4: way down the line. Now, let's say you take the
• 6:14
  Speaker 4: other example. They don't pass on those costs and they
• 6:18
  Speaker 4: say to Bunderberg or they say to Coca Cola or
• 6:21
  Speaker 4: Cadbury or whoever, Look, we can't pass on those costs.
• 6:25
  Speaker 4: You've got to cover it yourself. Well, the supply gets
• 6:28
  Speaker 4: in trouble, do they survive? Where do they get their
• 6:31
  Speaker 4: products from? So it's about striking that balance between suppliers, customers, shareholders.
• 6:39
  Speaker 4: But certainly, and then we've written about this, certainly for
• 6:42
  Speaker 4: Woolworths and for Calls, they believe there's a little appetite
• 6:47
  Speaker 4: in this current environment to raise prices for shoppers. They
• 6:51
  Speaker 4: just won't accept that.
• 6:54
  Speaker 1: Here's what Woolly's CEO, Amanda Bardwell had to say about
• 6:57
  Speaker 1: that at The Australian's Global Food for in March.
• 7:03
  Speaker 5: I'm very concerned for customers. They're already under immense cost
• 7:07
  Speaker 5: of living pressure and so to see the incroasis that
• 7:10
  Speaker 5: we have from a fuel perspective, it does just add
• 7:13
  Speaker 5: another layer of pressure on customers. And so for us,
• 7:16
  Speaker 5: that's where we're very focused right now. Is value unbelievably important,
• 7:21
  Speaker 5: and that's critical for us to really focus on what
• 7:24
  Speaker 5: is it that we can do right now to make
• 7:26
  Speaker 5: a difference.
• 7:28
  Speaker 1: From the suppliers point of view, that is crushing news.
• 7:32
  Speaker 1: And they often have a real love hate relationship with
• 7:35
  Speaker 1: these supermarkets. You know, dairy producers for example, are at
• 7:38
  Speaker 1: the mercy of price stting by these retail giants because
• 7:41
  Speaker 1: of course they rely on them. Where does your sympathy
• 7:44
  Speaker 1: lie here, though, Eli? You know, do you understand how
• 7:47
  Speaker 1: it is incredibly confronting for a company like Bunderberg, which
• 7:50
  Speaker 1: employs about two hundred and eighty people, to be in
• 7:53
  Speaker 1: this situation.
• 7:54
  Speaker 4: Yeah, I've been bundergoing a great regular company, and we
• 7:57
  Speaker 4: need more of those regial companies in rule and regual
• 8:00
  Speaker 4: areas employing people in good, well paying jobs. I think
• 8:05
  Speaker 4: it's tough, and I don't have a dog in this fight,
• 8:07
  Speaker 4: but my sympathy is actually with everyone because the supplier
• 8:11
  Speaker 4: needs to make money, The supplier needs to stay in business.
• 8:15
  Speaker 4: The supply needs to make a return on their own investment,
• 8:17
  Speaker 4: whether it's Bunderberg or a giant like Coca Cola. To
• 8:21
  Speaker 4: keep on investing a company like Coca Cola or Cadbury's
• 8:26
  Speaker 4: or any of those big brands that you see in
• 8:28
  Speaker 4: the supermarket. They won't invest in Australia unless they can
• 8:31
  Speaker 4: make a return, a decent return, and that means thousands
• 8:35
  Speaker 4: of their own jobs. It means investment in regional factories.
• 8:40
  Speaker 4: The money's not there, they'll close down. That's a problem
• 8:43
  Speaker 4: for Coals and Woolworths. If they can't make money, they
• 8:46
  Speaker 4: will open less stores, they employ less staff. Of the
• 8:50
  Speaker 4: staff they do have, they'll pay them less money. They
• 8:54
  Speaker 4: also have sympathy with the shopper. They need to be
• 8:56
  Speaker 4: able to afford the groceries in the first place. And
• 8:59
  Speaker 4: in this environl there is little appetite to raise prices.
• 9:02
  Speaker 4: It's very tough out there. There is a cost of
• 9:04
  Speaker 4: living crisis. Inflation is already out of control. It's ticking
• 9:08
  Speaker 4: up to four percent. Many economists believe it will get
• 9:12
  Speaker 4: to five or six percent even as this crisis in
• 9:15
  Speaker 4: the Middle East plays out. Someone has to pay more now.
• 9:18
  Speaker 4: Maybe it's spread evenly. Maybe it's like, you know, a
• 9:23
  Speaker 4: quarter with the supplier, a quarter with the supermarket, some
• 9:26
  Speaker 4: with the customer, some with the shareholder. Someone has got
• 9:30
  Speaker 4: to bite the bullet is someone has to take that cost.
• 9:33
  Speaker 4: It's now a big tug of war between those three
• 9:36
  Speaker 4: or four parties, and it's not clear yet where it's
• 9:40
  Speaker 4: going to go.
• 9:43
  Speaker 1: Coming up. Is there a way to make the whole
• 9:45
  Speaker 1: system fairer?
• 10:04
  Speaker 4: Is there Do you.
• 10:05
  Speaker 1: Think an opportunity for there to be at a two
• 10:07
  Speaker 1: speed system here where Coals and Wilworths kind of use
• 10:10
  Speaker 1: their power and maybe consider it their obligation to help
• 10:13
  Speaker 1: protect small supplies who would go under without them, and
• 10:16
  Speaker 1: maybe inflict a little bit more pain on the Coca
• 10:18
  Speaker 1: Colas of the world, who, let's be honest, are going
• 10:20
  Speaker 1: to survive no matter what.
• 10:22
  Speaker 4: Yeah, and you think they would survive no matter what.
• 10:25
  Speaker 4: And Wallies and coals the supermarkets, they are sympathetic to
• 10:28
  Speaker 4: the suppliers and the problems of these supplies, especially smaller
• 10:32
  Speaker 4: ones who do rely so much on the great volumes
• 10:36
  Speaker 4: they can get with coals of woolies. You mentioned this
• 10:38
  Speaker 4: love hate relationship. That's absolutely true. If you're a small
• 10:41
  Speaker 4: supplier like Underberg or anyone else, if you can get
• 10:45
  Speaker 4: a deal with coals and Woolies, that's huge volumes you
• 10:48
  Speaker 4: can have through your factory that really sustains you and
• 10:51
  Speaker 4: keeps you going. But I think, for example, you mentioned
• 10:54
  Speaker 4: Coca Cola, Coke, or Mars, Wrigley or Cadbury's. We think
• 10:59
  Speaker 4: of these large suppliers as faceless conglomerates who make so
• 11:04
  Speaker 4: much money it doesn't really matter to them. But in
• 11:06
  Speaker 4: a way it does. And when we've interviewed with the Australian,
• 11:10
  Speaker 4: the local bosses of Mars or Cadbury or Coca Cola,
• 11:15
  Speaker 4: they have to go back to their head offices which
• 11:18
  Speaker 4: are overseas, perhaps in Switzerland or the United States, and
• 11:21
  Speaker 4: they have to justify to them why they keep on
• 11:24
  Speaker 4: investing in Australia. They have to justify the return to
• 11:28
  Speaker 4: the head office. And if Coca Cola in Atlanta, or
• 11:32
  Speaker 4: Nesley in Switzerland, or Mars, which is in Chicago, if
• 11:36
  Speaker 4: they can't see a return of investing in Australia, they
• 11:39
  Speaker 4: won't invest. They can move the factory to Indonesia or
• 11:43
  Speaker 4: the Philippines or China and then quite easily import that
• 11:47
  Speaker 4: product to Australia. And that means we lose out on jobs.
• 11:50
  Speaker 4: Many of them are regional jobs. Cadbre Mars have got
• 11:54
  Speaker 4: regional factories. We lose out on technology. We lose out
• 11:58
  Speaker 4: on an investment, and they can do that very easily.
• 12:00
  Speaker 4: If you're an executive in Mesley in Switzerland or in
• 12:04
  Speaker 4: Mars in Chicago, you don't really care too much about
• 12:09
  Speaker 4: perhaps jobs being lost in Australia. It's not going to
• 12:11
  Speaker 4: be of concern to you. But those are real choices
• 12:14
  Speaker 4: being made right now, and those conglomerates have to justify
• 12:19
  Speaker 4: a return in Australia, as does Bunderberg or a small
• 12:23
  Speaker 4: muslea company or a small sweets or chocolate company in Melbourne.
• 12:28
  Speaker 1: It's interesting, isn't I think One of the reasons why
• 12:30
  Speaker 1: the Bunderberg story appeal to our audience so much is
• 12:33
  Speaker 1: that this is one of the little affordable luxuries that
• 12:36
  Speaker 1: makes life worth living, especially in a time of high
• 12:39
  Speaker 1: cost of living. You know, you might not be able
• 12:40
  Speaker 1: to afford anymore to take the whole family out to breakfast,
• 12:43
  Speaker 1: which is now one hundred dollars proposition, but you can
• 12:46
  Speaker 1: buy a six pack of Bunderberg ginger beas and drink
• 12:48
  Speaker 1: them on a Thursday night or something at home. It's
• 12:51
  Speaker 1: really sad that it's those small suppliers who are feeling
• 12:55
  Speaker 1: the pain kind of hardest and first isn't it.
• 12:58
  Speaker 4: I think it is, and it's anigh conic that is overused,
• 13:01
  Speaker 4: but it is an iconic Australian brand which should get
• 13:04
  Speaker 4: our support absolutely, and people do love Underberg gingerbeer. I do,
• 13:08
  Speaker 4: and people just have that emotive feel about it.
• 13:13
  Speaker 2: It's a story that started with mom, dad, my wife
• 13:16
  Speaker 2: and I now up to its fourth generation of a
• 13:20
  Speaker 2: true blue brew that captured the hearts and the taste
• 13:24
  Speaker 2: buds of the nation.
• 13:27
  Speaker 4: But I think if they went to the supermarket and
• 13:30
  Speaker 4: saw that six pack or slab of ginger beer had
• 13:32
  Speaker 4: gone up by five or ten percent, you watch the
• 13:35
  Speaker 4: sales drop. They will just absolutely shrink. And from our discussions,
• 13:41
  Speaker 4: our interviews with Bunderberg, you know they're possibly asking for
• 13:46
  Speaker 4: maybe five six percent increase price increase from Mullies or Calls. Now,
• 13:52
  Speaker 4: if that is translated to a five or six percent
• 13:55
  Speaker 4: increase at the shelf price, you com bet sales will plummet.
• 14:00
  Speaker 4: It's a big problem that's today's fresh food people.
• 14:05
  Speaker 1: Price is of course the thing that Calls and Woolies
• 14:07
  Speaker 1: are experts in. Then that's how they've got themselves into
• 14:12
  Speaker 1: trouble with the Australian competition and consumer Commission. The a
• 14:16
  Speaker 1: Triple C is taking will worse than Coals to court
• 14:19
  Speaker 1: for alleged misleading claims in their ads. There's always something
• 14:23
  Speaker 1: that's causing supplies to feel the heat. In this instance,
• 14:26
  Speaker 1: there's this extra pressure from the regulator. Is that what
• 14:31
  Speaker 1: is making Woolies, for example, pushback so hard on supplies
• 14:34
  Speaker 1: right now?
• 14:36
  Speaker 4: I think yes, the regulator is taking a very close
• 14:38
  Speaker 4: eye as our politicians on the way supermarkets treat supplies.
• 14:43
  Speaker 4: And we saw that play through a Senate inquiry and
• 14:45
  Speaker 4: a couple see inquiry which the supermarkets have to deal
• 14:49
  Speaker 4: in good faith with supplies and sit down with them
• 14:52
  Speaker 4: and listen to what's going on, and they need to
• 14:55
  Speaker 4: respond within about thirty days of a price high request.
• 14:58
  Speaker 4: So we're going to start to see that now hit
• 15:00
  Speaker 4: Coals and Mollies and they have to really consider what
• 15:04
  Speaker 4: they do. But it's certainly a big problem where you've
• 15:06
  Speaker 4: got diesel fuel prices going up forty percent. Someone's going
• 15:11
  Speaker 4: to pay for that? Who pays for it? Now? Do
• 15:14
  Speaker 4: the politicians want that to end up in shelf prices,
• 15:17
  Speaker 4: which then ends up in inflation and puts more pressure
• 15:20
  Speaker 4: on the Reserve Bank to increase interest rates. Would they
• 15:23
  Speaker 4: rather see Coals and Moullies take a hit to their profit? Well,
• 15:27
  Speaker 4: I don't know if Shells will be happy. And by
• 15:29
  Speaker 4: the way, most Australians have shares in Coals and Mollies
• 15:32
  Speaker 4: to their super funds. So would you want a lower
• 15:35
  Speaker 4: return on your investment? I mean, who wears the pain here?
• 15:38
  Speaker 4: It's not very clear at the moment.
• 15:40
  Speaker 1: Yeah, it's a diabolical situation. And these are basically logistics companies,
• 15:43
  Speaker 1: aren't they for supermarkets? I mean their food retailers of course,
• 15:46
  Speaker 1: and they're experts in marketing, but most of their time
• 15:49
  Speaker 1: must be spent working out kind of logistics like these.
• 15:52
  Speaker 4: So much is that case of imagine a supermarket in
• 15:55
  Speaker 4: this particular to the supermarkets. Imagine getting fresh food, dairy
• 16:00
  Speaker 4: food that is perishable all over the country at the
• 16:03
  Speaker 4: lowest price possible, in the fastest possible way, so it
• 16:06
  Speaker 4: doesn't go off on the shelf at the same price
• 16:09
  Speaker 4: that you charge anywhere in the country. It's a huge,
• 16:13
  Speaker 4: complex logistical nightmare. And not surprisingly, Coals and Woolworths invest
• 16:19
  Speaker 4: billions of dollars billions on their logistics, on their supply chains,
• 16:24
  Speaker 4: on their warehouses, and they do that with the hope
• 16:27
  Speaker 4: of getting a return. So, you know, Coals, for example,
• 16:31
  Speaker 4: in the last few years has spent two or three
• 16:33
  Speaker 4: billion dollars on state of the art warehouses, using robots,
• 16:39
  Speaker 4: using automation to really increase their efficiency and their speed
• 16:44
  Speaker 4: from the farm gate to the shelf. But to do that,
• 16:48
  Speaker 4: they need a return. They need to make a profit
• 16:51
  Speaker 4: to justify that, you know, I Agreen, thank you very much,
• 16:54
  Speaker 4: thank you.
• 17:02
  Speaker 1: Eli Greenblatt is a senior business reporter with The Australian.
• 17:06
  Speaker 1: You can read all the latest in business, as well
• 17:08
  Speaker 1: as Australia's best news, sport and politics right now at
• 17:12
  Speaker 1: the Australian dot com dot au