Supermarket giants Coles and Woolworths defer responsibility in TimTam cost saga

Supermarket bosses have dodged questions about why a pack of TimTams is more expensive in an Australian grocery store than in London.

Liberal senator Jane Hume on Friday quizzed Coles and Woolworths senior executives on why a packet of the chocolate biscuits was $6 Down Under and about $4.86 at Tescos, a popular UK supermarket chain.

Senator Hume noted it was “strange” a “product that was manufactured in Western Sydney would cost more at a supermarket in Sydney than it would at a supermarket in London despite the “rigmarole” over freight costs and import taxes.

Woolworths chief commercial officer Paul Harker told a senate inquiry into the cost of living that it was “probably a great question for Arnott’s”.

He said Woolworths adopted Arnott’s “recommended retail price” and couldn’t speak to negotiations the biscuit giant had with other markets.

“I don’t know what arrangements they do or don’t have with selling that product into the UK market and what margins they’re expecting to make from that product in that market,” Mr Harker said last Friday.

“In this market, we have negotiated the best standard cost that we can every day with Arnott’s … and we then put all out efforts into negotiating promotions on those products for consumers.”

Coles head of public affairs Adam Fitzgibbons said it shouldn’t be assumed that Arnott’s sold their products at the same cost to Australian retailers as it did to international grocers.

“That’s not something Coles would have visibility of at all, but I think that’s certainly a question that would be very best directed toward Arnott’s” he said.

“We don’t have visibility over, as we said, their commercials, what they sold at Tescos or their promotional arrangements with them, but those are the types of factors that would impact that retail price.”

Taking aim at Coles, Senator Hume also noted the chain had TimTams on a promotional price of $4.50 and asked Ms Fitzgibbons whether the biscuits were being sold as a loss leader, in which an item is sold at a lower price to encourage customers to buy other products.

Mr Fitzgibbons said while promotional prices were negotiated with suppliers, he declined to add further details due to legal action with the Australian Competition & Consumer Commission (ACCC).

The customer watchdog is taking both Woolworths and Coles to court for allegedly misleading consumers by temporarily hiking prices by at least 15 per cent before slapping them with promotional discount stickers at prices higher than before the hike.

The ACCC claims Woolworths did this for 266 products in its Prices Dropped promotion over 20 months, while it alleges Coles did it for 245 products in its Down Down promotion across 15 months.

In September, Arnott’s defended the cost of its 200g packet of TimTams after shoppers complained about the hefty price tag.

The company said it was experiencing significant input costs, including the “surging price of cocoa”.

During the inquiry, the supermarket giants also gave evidence that the grocery industry was “very competitive” despite the ACCC indicating Australia’s market was an “oligopoly” with dominant players Coles and Woolworth holding control of prices.

Greens senator Nick McKim asked why the views between the ACCC and the supermarkets were so “diametrically opposed”.

Mr Fitzgibbons said that while there were a “limited number of supermarket chains,” a “high level of concentration does not equal a low level of competition”.

Mr Harker said the report also noted consumers were “cross-shopping more than ever”.

“I accept the fact we are a concentrated supermarket sector, and that’s not determinative of a lack of competition,” he said.