Cadbury boss Toby Smith says politicians beating up supermarkets is ‘unhealthy’

The local boss of Cadbury says he has never witnessed supermarket price gouging in his 20 years in the business, and beating up the big retailers is ‘unhealthy’ for the industry.

Mondelez Australia, NZ and Japan boss Toby Smith says chocolate volumes are stable despite cost-of-living pressures for consumers. Picture: Facebook

In the more than 20 years Toby Smith has spent in the confectionery and food industry, most of that time with one of the world’s largest supermarket suppliers Cadbury owner Mondelez, he is adamant he has never witnessed any “profit gouging” by Woolworths and Coles.

Furthermore, the recently appointed boss of Mondelez Australia, NZ and Japan wants politicians to stop beating up on the supermarket chains, warning that making them the “whipping boy” for cost-of-living pressures is unhealthy for the industry and a distraction from the real issue at hand – the crucial need to lift productivity in Australia.

Mr Smith is looking for the next federal government to introduce real productivity reform to help bolster manufacturing in Australia as well as encourage its investment and growth, but first there needs to be an end to the constant attacks on the supermarkets and unfounded claims of price gouging.

His comments come as Mondelez looks to battle cost-of-living pressures, introducing a new 100g Cadbury entry-level block at a time when a more than tripling of cocoa prices is pinching household budgets. Australia will be the first market outside Britain to stock the new chocolate size.

The new entry level 100g Cadbury chocolate block is one answer to the cost-of-living challenge for shoppers.

Mr Smith strongly believes customers are hunting for value for money and are very savvy when it comes to price, underlining the improbability of any supermarket getting away with profit gouging.

“I have worked in the industry for 21 years as a partner of the supermarkets, and we have always focused on value and quality as being fundamental to being successful as a manufacturer and successful for supermarkets,” he said.

“What I can tell you is all the conversations that I’ve ever been a part of have always been focused on value and quality for the customer.

“And on our blocks of chocolate I haven’t seen that (profit gouging), no.”

If supermarkets were profit gouging it would spurn price-sensitive shoppers and hurt food manufacturers such as Mondelez, and no party in that relationship has an incentive to rip off shoppers. In fact there was a deep disincentive to do so, he argues.

“The Australian customer is very intelligent so there are enough offers in the market that if you are just taking pricing you will find your volumes do disappear.”

Mr Smith said unprecedented rises in key commodity prices – namely cocoa, which is up 400 per cent, or sugar – needed to be passed on partly to the supermarket, which filtered through to shoppers. But a simple glance at Woolworths’ and Coles’s thin profit margins highlights that no such gouging was taking place.

Mr Smith is one of the first major grocery suppliers to call out the “supermarket bashing” engaged in by some politicians.

Toby Smith. Picture: Facebook

Kicking off last month’s election campaign, Prime Minister Anthony Albanese reignited the “profit gouging” accusation against the supermarkets by announcing a newly elected ALP government would introduce legislation to heavily penalise supermarkets found to be over-earning. This came despite an intensive year-long investigation by the Australian Competition & Consumer Commission – which released its final report only a week before Mr Albanese’s announcement – that found no proof of unfair pricing.

“Everyone is focused on cost-of-living challenges, and supermarkets (are) a very tangible place where that can (play out). What I can tell you, again, from my experience … we work very closely with the retailers focused on our value, and both the supermarkets and Cadbury have always put customers first,” Mr Smith said.

Mondelez’s large portfolio of brands include Cadbury, Toblerone, Oreo, Philadelphia spreads and Ritz crackers.

“You need healthy supermarkets, we need healthy manufacturing to give customers what they want, so I don’t think beating up on supermarkets is good for our industry,” he said.

He wants the nation, and the political class, to focus on the dire need to lift productivity if Australia is serious about keeping and growing its food manufacturing base.

“I think one of the opportunities is to continue to as an industry to talk with the government about productivity initiatives. I think there is a big opportunity post the election to have that dialogue.

“I see productivity as a real opportunity for our industry to continue to ensure people continue investing in Australia. We know ‘made in Australia’ is a really important trigger for consumers and so creating that virtuous cycle that ensures Australian manufacturing is healthy should be a priority for our industry and for government.”

Mondelez Australia boss Toby Smith says there is a dire need to improve productivity in Australia to bolster investment in local manufacturing. Picture: Wayne Taylor

Mondelez, which has been in Australia for 100 years, is backing this marke and invested more than $67m on infrastructure last year. In the coming months it will start operating from a new semi-automated warehouse facility in Melbourne’s west that represents a $130m investment over 10 years.

Hurtling out of the Mondelez assembly lines will be the new 100g chocolate block.

However, the chocolate category has remained strong, said Mr Smith, as consumers find some room for a treat.

“The consumer is not wavering from chocolate, in fact our volumes are holding very strongly.

“And I think it comes from a perspective that people still like to treat, people still want that moment of reward at the end of the day, and chocolate has always been something that’s held up through economically challenging times.”

The local boss of global giant Mars Wrigley predicted that historically high shelf prices for Easter confectionery this year will leave supermarkets clearing excess chocolate bunnies and eggs after the holiday, The Australian reported on Sunday.

Mr Smith said: “From where we sit, the Easter Bunny was run off his feet this year.”

Originally published as Cadbury boss Toby Smith says politicians beating up supermarkets is ‘unhealthy’