Coles milks the farmer-direct approach

Coles is extending its sourcing of farmer-supplied milk. Picture: AFP

Coles is now supplying West Australian consumers with milk directly sourced from farmers, after rolling out the program in easternstatesen route to tying up 60 farms nationwide.

Coles started the program in Victoria and NSW with the aim of reaching long-term agreements direct with farmers.

The milk is processed by third party suppliers, including Saputo in NSW and Victoria.

The West Australian program started on October 1 and Coles now has contracts with around 10 farmers, buying 35 million litres of milk a year.

It also deals directly with farmers in South Australia, but is likely to leave its arrangements with farmer-owner dairy cooperative Norco unchanged in Queensland.

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Its processors in WA are Brownes for Coles Express stores and Lion for its supermarkets.

Coles is also using a $50m nurture fund to help fund farmers, including a recent deal in South Australia to help fund a roof for a cherry farmer so it can supply Coles all year round.

Coles sources Australian products for 100 per cent of much of its fresh produce.

When it rolls out its Ocado online system in 2023 the aim will be to increase the merchandise available online as opposed to in stores.

In its home base in the UK Ocado supplies 50,000 different lines, against 20,000 in supermarkets.

Online sales now account for 6 per cent of total supermarket sales up from 4 per cent last financial year and against UK averages of over 10 per cent.

Coles is also increasing home brand sales, which now account for 31 per cent of sales, with a target of 40 per cent according to chief executive Steven Cain.

He said house brands gave Coles “a source of differentiation, everyday low prices and better value for consumers”.