FMCG Blog FMCG Views and News

Interviewed on the ABC’s World Today last Friday, Woolworth’s CEO, Michael Luscombe described the job losses at Pacific Brands as a “Tragedy”. As reprinted on the ABC website;

“MICHAEL LUSCOMBE: I think it’s a tragedy that we are talking about anybody losing their job let alone 1800 people. We have worked very closely with Pacific Dunlop because, you know, this has been a business that has not been without its challenges for a number of years.”

Give me a break, it is Woolworths and Coles who brought these job losses about. The vast majority of PacBrands products are sold through these two retailers and their subsidiary outlets.

Coles’ and Woolworth’s buyers have continued to put pressure on prices, both everyday and promotional deals as well as adding to the costs of doing business. Increase in trading terms, pushing logistics costs back onto suppliers, reduced ranging, increase in Home Brands etc.

It is a tragedy that people all over the country are losing their jobs, but take some responsibility Mr Luscombe, don’t start crying crocodile tears.

Tim

Posted under Jobs

Is this the worst job – being a Coles National Account Manager or Business Manager.  Competing against a heavily supported house brand, reduced promotional activity, reduced ranging, delistings and on top of that a request for more trading terms.

Request is probably not the correct word though is it?!

Any Comments, anonymous of course – use a  name like Idi Amin or Robert Mugabe.

Tim

Posted under News, Retailers

Woolworth’s has established a scheme where over 115,000 of their employees will be allowed to spend up to $1000 at any Woolworths store from their pre-tax income. The spending must take place before 9th January 2009.

Given that the employees are probably pretty loyal, it is questionable if this will boost sales by very much. It is a nice gesture at Christmas time however. I think that the money being dished out by Rudd over the next fortnight is going to give a bigger boost to sales, particularly in Big W.

Tim

Posted under News, Retailers

Been a big day for worried people. Orders canceled by major retailers, open to buy dollars cut hard and stock not being let out of China.

Look we all know it is bad out there but these things become a self fulfilling prophecy after a few weeks.

With major orders being canceled and open to buy cut back there will be many importers and distributors doing it very tough in the next 2-3 months. I would expect many to go to the wall as their cash flow dries up and they cannot repay their trade lines. This will result in job losses and lower spending and the cycle continues.

The milk scandal in China has got their government very worried. With more stringent checks being done on food items leaving Chinese ports, expect many supermarket shelves to be empty in the lead up to Christmas as stock is unavailable.

Major FMCG manufacturers have already held crisis meetings and are advising Coles and Woolworths that these issues will hit hard as stock run out in 2-3 weeks. With their heavy reliance on China for their own brands, this should not come as a big surprise, but I doubt it will stop them from raising loss of profit claims.

Any thoughts?

Tim

Posted under News

Another month’s results from the ACCC’s Grocery Choice web site and Woowlorths is now the cheapest. So what does this mean?  The front page of the web site tells us the news;

• Woolworths cheapest on total grocery basket in 59 of 61 regions (up from 21 last month)
• Nationally, the price difference between Coles, Woolworths and Independents has narrowed
• ALDI cheapest on basic staple products

By the way this is what they do;(from the web site)

“Price information is obtained from an independent monthly survey of approximately 500 products from 600 supermarket outlets across Australia. The results of each monthly survey will be made available on the GROCERY choice website on the first business day of the following month.” Read More…

Posted under News, Retailers

When Coles, Woolworths and Franklins agree on something I get suspicious. As reported in the online version of FOODWEEK yesterday,

“Woolworths, Coles, and Franklins have joined the Australian Food and Grocery Council (AFGC) in a push to make nutrition labeling more transparent and meaningful for Australian consumers by adopting the Daily Intake Guide.”

The Daily Intake Guide is a set of front of packaging labels that give a percentage of daily nutrient and energy that a standard serve of that product will provide the average adults intake.

Who decides on the average serve? Is it realistic? Does anyone take any notice?

So why do they all agree? Australian Food News reported yesterday that a survey commissioned by groups including the Cancer Council and Choice in the Sydney and Newcastle areas, showed that only 64% of shoppers surveyed could recognise healthier foods using the Daily Intake Guide. The survey showed that

the “Traffic Light” labeling system was more effective with 81% of shoppers being able to identify healthier foods using these labels.

The Australian Food News article puts the AFGC’s side of the argument through its CEO Kate Carnell, who states;

“The fact that CHOICE’s survey results contradict a large portion of
the data produced by reputable international organisations leads us to
question their approach.”

Well Well, what is the story here. Lots of axes to grind, big corporates and high profile interest groups. I’m none the wiser but I am suspicious.

Any one know what is going on?

Tim

Posted under News

So it’s been confirmed that Mitre 10 is looking at its options, as extracted from the AFR on the 24th Sept 08;

“Hardware group, Mitre 10, staged its annual convention on 23 September 2008. The organisation’s CEO, Bernie Bicknell, claimed that in the past 12 months, a lack of funds prevented the company from purchasing about half a dozen strongly performing stores. Bicknell reaffirmed that Mitre 10 is considering options such as an outright trade sale or a capital injection”

Well I believe it may well be Metcash who is the preferred bidder or injector. The complex franchise structure of Mitre 10 is proving a bit too much of a challenge for the Corporate Heads at Woolworths and they are getting cold feet. Without ultimate control of the entity they think it will be too hard to turn around this loss making network. Metcash on the other hand has the buying experience and understands the challenges of dealing with individual owners at store level. Read More…

Posted under News

Reported this morning:

Woolworths CEO, Michael Luscombe, at a Retail Traders Association of Western Australia breakfast in Perth this morning gave his take on the Australian consumer. The Age reports he said;

“The sense of looking for value has heightened in the past nine months,” 

Surprise, surprise we all say within the industry. With ALDI popping up all over the East Coast and Private  Labels pushing 2nd, 3rd and 4th brands of the shelf, manufacturers have been well aware of this thanks Michael. Mr Luscombe also indicated that GM foods would not be introduced into the HOME or SELECT brands unless convincing and thorough scientific evidence emerged that these foods were safe.

Patties, (PFL:ASX Listed) Australia’s biggest pie maker has annouced the resignation of their CEO and the appoinment of a new one this morning. Dr Michele Allen resigned as a director only last month to concentrate on her role as CEO and this morning her resignation as CEO has been announced. She has decided to pursue other interests, whatever that means these days.

They have appointed Greg Bourke as CEO, effective immediatly I presume. Another long line of CFO to CEO appointments, with Mr Bourke’s background being Finance Manager – George Weston Foods Milling and most recently CFO – Don/KRC. All the best Greg.

Tim

Posted under News

Hardware buying supermarkets, we have seen that, supermarkets investing in hardware, watch this space.

Mitre 10 has been struggling for the past decade to have an impact in the Hardware channel, particularly in metropolitan areas. The Australian Financial Review has reported that Mitre 10 and Woolworths are in discussions regarding a capital injection or outright purchase of entity.

The AFR also indicates that Mitre 10 will be holding a shareholders meeting during its National Convention next week on the Gold Coast. With the vast majority of shareholders in attendance this is an ideal opportunity to present a restructure or buyout proposal.

Hardware should not pose any ACCC issues for Woolworths as this is one of the few areas that WOW do not participate in in the Australian market.

Tim

Posted under Retailers