Woolies denies selling milk below cost
SUPERMARKET giant Woolworths has told a Senate inquiry that it is not selling its home-brand milk for below cost despite a price war with its biggest competitor.
Woolies and Coles have been engaged in a price war on generic-branded milk since January raising concerns that a shelf price of $1 a litre threatens the viability of the dairy industry.
The price war has been extended to eggs and there are reports that Coles is looking to open up a new front on fresh chicken.
A beer price war was thwarted by brewing giant Foster’s when it withdrew supplies from the two supermarket giants.
Senior executives from both companies are appearing before a Canberra hearing of a Senate inquiry today.
Pat McEntee, general manager of fresh foods with Woolworths, told the hearing his company had no wish to have been the first to reduce the price of milk.
It was also concerned that the decision by Coles to drop the price of milk “overnight” threatened to put pressure on the supply chain by creating an imbalance between branded and home-branded milk.
Mr McEntee said profit margins on milk were “very skinny” even though sales of the product had increased since the price war began.
He admitted the profit margin on branded milk was better than it was on its own-brand milk.
“We are not selling (own brand) milk below cost,” Mr McEntee told the hearing.
But he was not prepared to say now whether the company would provide the inquiry with figures supporting that assertion.
Woolworths was not looking to replace branded milk products with its own label, Mr McEntee said.