Aldi among retailers not to sign up to grocery code of conduct in Australia

Aldi among retailers not to sign up to grocery code of conduct in Australia

Aldi has indicated it does support the idea of a code of conduct overseeing dealings between retailers and manufacturers in Australia after facing criticism for not signing up to a recently-introduced agreement.

The discounter has not joined a code drawn up by Australia's two largest grocers, Woolworths Ltd and Coles, and the country's food manufacturing association, the Australian Food and Grocery Council.

Earlier this week, Tjeerd Jegen, the head of Woolworths' supermarket business in Australia, questioned why other grocers operating in Australia had yet to join the code. He also pointed to the way Aldi packaged some of its own-label lines, suggesting the products were presented in too similar a way to branded items.

"In order to get a level playing field, I can't understand why every retailer is not signing up to the code. Everyone is asking for a level playing field and we're providing it now," Jegen told The Australian Financial Review.

Jegen sought to highlight what he saw as too close a similarity between Aldi's own-label lines and branded products. "One of our major competitors has 96% of their range that is own-brand," Jegen said. "If you don't look carefully, you'd think it came from suppliers' brands."

Other major grocers operating in Australia like Metcash and Costco have also so far not signed up to the code.

The AFGC has proposed the code will be prescribed by the Australian government under the auspices of the Competition and Consumer Act.

Aldi argued the agreement had been put together in response to supplier concerns over the conduct of Australia's two largest food retailers.

"[The code] is as a result of a number of concerns that have been raised by suppliers about unfair business practices, including suppliers being forced to pay for shrinkage, wastage and additional or superior shelf space for their products.

"Given the code focuses on the practices of the two major supermarket retailers, Aldi, which has a very different business model and approach to supplier relationships, has not been asked by the AFGC to take part in the drafting of the code," Aldi said.

Aldi insisted it backed the "concept" of an industry code and would put forward its views during a planned period of public consultation on the agreement.

"In principle we support the concept of signing an industry code which ensures a sustainable future for Australian growers and manufacturers. However, we will await the feedback from the Australian government and the Australian Consumer and Competition Commission and provide input during the public consultation period that follows in the New Year."

Aldi also responded to the criticism from Jegen about how its own-label lines were packaged. The retailer insisted consumers would not be confused. "In terms of recent comments regarding intellectual property and our exclusive brands, the reality is that consumers know the high quality and low cost of our everyday range of products. There is no possibility of confusion at Aldi," it said. "Aldi has a unique business model that creates brands in partnership with our suppliers. We ensure we carry out due diligence when developing the style guide and packaging of all of our products and labels."