Supermarket investigation reveals a false choice

Zoya Sheftalovich and Elise Dalley of CHOICE, Australia, discuss the pressure that big supermarkets place on their suppliers – and what this means for consumers. 

Australia has a highly-concentrated supermarket sector. Our two big players, Coles and Woolworths, control more than 70% of the market. 

Anecdotally, CHOICE had been hearing for a while that relationships between the supermarkets and their suppliers and manufacturers were strained. People were ringing us to complain of their favourite products disappearing from supermarkets, and we became aware of a trend – seemingly successful product lines were being squeezed off the shelves by home brand products.

As a consumer watchdog, there was some reticence in the office about us looking into these reports – surely supermarkets increasing their home brand product lines would be beneficial to consumers, as long as these cheaper products provided good value and quality for consumers. But our members were increasingly upset, and we knew we had to investigate.

Extreme tactics

After asking our members to tell us about products they had noticed disappearing off the shelves, we compiled a list of dozens. We then got on the phone, calling manufacturers for several days.

We heard the same story again and again: yes, product lines had been deleted, with little or no notice, and for seemingly no reason. Yes, tactics leading up to the deletion had been extreme. No, I won’t go on the record. No, I can’t talk to you in more detail. No, you can’t use my name. I need the supermarkets, and I cannot afford to antagonise them.

And it was not just small manufacturers that were feeling the pain. Several large-scale operators spoke obliquely about the harsh Australian grocery market, but clammed up when it came to giving details.

But perseverance paid off, and several sources finally agreed to tell us their stories off the record. One even agreed to have his name put to his allegations.

What we heard was terrible in its implications for manufacturers and suppliers, but was also detrimental to consumers – the supermarkets seemingly had no qualms about using their buying power to push suppliers to the brink, and the number of people we spoke to who were either on the precipice of losing their businesses, or had already done so, was frightening. The competition from the supermarkets was wiping out the competition altogether.

Worrying signs

From demanding hundreds of thousands of dollars for marketing, to setting unrealistic sales targets, to hiding products behind vertical columns in store and releasing their own, home brand products in deceptively similar packaging, the tactics used by the supermarkets were worrying.

Was this what consumers wanted? We didn’t think so.

When we published our series of investigations looking at the situation on the shelves, the copycat tactics of home brand products, and the emerging issue of incognito home brand wine, the response was resounding. We received messages of support from a huge number of our members.

And over a thousand people voted in our poll for the best (or is it worst?) copycat product. The winner?  Coles home brand sunscreen, which came in a tube that looked uncannily like the one put out by Australia’s national cancer NGO, the Cancer Council, the proceeds of which go to cancer research.

When two supermarkets control such a large share of the grocery market, no product is safe, and the consumer is not always king.

You can read the full details of our supermarket investigation here: http://www.choice.com.au/reviews-and-tests/food-and-health/food-and-drink/supermarkets

Consumers can make a difference to conditions in the banana trade

Eliana Guarnoni of CI’s Italian member organisation Altroconsumoexplores the production conditions behind the world’s most popular fruit.

Bananas are the world’s most popular and internationally-traded fruit. The industry is an important source of employment and income for millions of people in developing countries, but all too often is associated with negative economic, social and environmental impacts.

With more and more of us concerned about the story behind the food we buy, consumer rights groups are increasingly looking at the ethics of the tropical fruit trade.  CI recently examined conditions within the pineapplesupply chain, and this has led us to take a closer look at the altogether bigger banana trade.

The World Banana Forum (WBF) is the centre for action on this issue. It is a multi-stakeholder initiative that aims to improve conditions within the banana supply chain by bringing together producers, retailers, trade unions, NGOs, academics and exporters to share good practice and come up with solutions to the most urgent problems.

Working conditions

While attending the Second Conference of the WBF in Ecuador, I visited banana plantations in El Oro and Los Rios. It was particularly interesting to learn about the intensive use of chemicals in both the plantations and the packing areas.

Workers and the local communities surrounding the plantations have reported increasing levels of disease and believe that these chemicals are responsible.

Specifically, they say a lack of protective equipment and inadequate measures to prevent contamination in surrounding areas are to blame.

Discussing strategies to reduce the negative impact of chemicals on human beings and the environment is a top WBF priority, and in El Oro and Los Rios it was clear to see why.

But chemicals aren’t the only thing that poses a health risk on a banana plantation. The weight of a bunch of bananas is around 40 kilos. Workers in the packing area are required to move hundreds of banana boxes (each weighing 18 kilos) every day.

But workers are paid a piece-rate and in many cases they cannot earn enough to satisfy their family’s basic needs, even if they work 12 hours a day.

Women on the banana plantation

I also attended a meeting focusing specifically on conditions for female workers. Around 30 women from morethan 15 countries shared their views and experiences. It was striking to see how many of the issues facing women are common across borders.  

For example, women find it more difficult than men to get hired by banana producers – even though they could be easily employed in the washing area – and are often dismissed when they get pregnant. Challenges like this make it much harder for women in the major banana-exporting countries to make a significant contribution to their family’s livelihood.

The role of consumers

It was not uncommon to hear consumers used as an excuse to avoid taking responsibility for making real improvements to supply chain conditions.

One of the most recurrent arguments is that increased costs translate into higher prices for consumers, which, in turn, causes demand to decrease so that in the end nobody benefits.

But, in fact, studiesconducted in several EU countries show that a significant proportion of consumers are ready to pay more for more sustainable products.

In any case, the price increase is often negligible. It is estimated that plantation workers only receive around 3%-4% of the final retail price paid by consumers.

Raising this share to 5% would mean either asking consumers to pay 0.05 Euros more per kilo or requiring companies and supermarkets to decrease their profits by 1%.

Consumers as a key stakeholder

WBF demonstrated to me that taking part in multi-stakeholder initiatives can be a useful strategy for consumer organisations.

It is clear that the consumer voice – which is so often missing in platforms like this – is very much respected and appreciated by other stakeholders.

WBF also shows how multi-stakeholder initiatives can be a really effective way to focus on the most relevant and urgent issues in a specific sector and to improve the research methodologies used by consumer organisations.

It is also important to demonstrate to other key stakeholders – whether its producers, exporters, trade unions, supermarket chains, intergovernmental organisations, research institutions or NGOs –  that consumer groups are monitoring how products bought by consumers are produced.

This scrutiny can play a vital part in bringing about better conditions in production and trade, while at the same time fostering constructive partnerships between stakeholders to achieve common goals.