Aldi named best supermarket by suppliers as grocery code reviewer releases public rankings for first time

Australia’s big four supermarkets have been named and shamed in a previously secret ranking made public for the first time.

Not a single formal complaint was raised about supermarkets’ treatment of suppliers last year, highlighting food and vegetable growers’ fears of “retribution” despite the ostensibly confidential process being touted by the major chains as the go-to dispute resolution mechanism for disgruntled farmers.

“You will never get those suppliers to criticise the duopoly – they have too much to lose,” one Queensland grower of 40 years, who asked not to be named, told news.com.au.

“I’m not surprised no complaints have been made to the independent arbiters. It would be easy for them to understand where the complaint is coming from. The problem is if you were to make a complaint and you then lost your contract then your business is compromised. If you lose the ability to trade with either Coles or Woolworths then your business is not viable because of your economy of scale.”

The latest annual report from Grocery Code Independent Reviewer Chris Leptos AO, a Treasury-appointed official tasked with assessing the performance of the Food and Grocery Code of Conduct, has ranked the four major supermarkets based on the feedback from suppliers for 2022-23.

Aldi was rated the best overall, followed by IGA-supplier Metcash, with Coles and Woolworths in third and fourth place, according to the report published on Thursday.

It’s the first time Mr Leptos has publicly shared the performance of the supermarkets based on the survey responses from their suppliers. Previously the rankings were provided to the code signatories confidentially.

The Grocery Code Independent Reviewer has released public rankings. Picture: Shae Beplate

“By publishing the rankings, I am hopeful that it will be used to stimulate a competitive ‘race to the top’,” he wrote.

An interactive table breaking down the rankings by categories has also been published on the Independent Reviewer’s website.

Suppliers were asked to rate the supermarkets on four aspects of their treatment – fair and reasonable dealings, clear and prompt communication, dealing in good faith, and taking prompt, constructive action to resolve issues raised.

Coles was ranked the worst for fair and reasonable dealings and dealing in good faith, followed by Woolworths. Aldi scored highest in both categories, followed by Metcash.

Overall, however, 71 per cent of suppliers reported no issues.

The voluntary Australian Food and Grocery Code of Conduct, prescribed under the Competition and Consumer Act 2010, establishes an independent dispute resolution process where suppliers can take confidential complaints about their treatment to each supermarket’s independent arbiter, who has powers of remedy which include compensation up to $5 million.

Mr Leptos noted that he “did not receive any requests to review a complaint handled by the Code Arbiters in 2022-23 reporting period”.

“However, I continue to receive direct approaches from suppliers where they are reluctant to formalise a complaint,” he said.

“The lack of formal complaints may be explained by the changes adopted by the Code Signatories – specifically, authorising their Code Arbiters to play a more proactive role in listening to supplier concerns without lodging a formal complaint.”

Woolworths came in last place, followed by Coles. Picture: Monique Harmer

Forty-one per cent of respondents identified fear of damaging their commercial relationship as an impediment to raising issues with Woolworths and Coles, compared to 28 per cent for Metcash and 21 per cent for Aldi.

“While these results suggest that the Food and Grocery Code is working well, they also highlight ongoing issues in the supermarket sector,” Assistant Minister for Competition Andrew Leigh said in a statement.

“Most Australians buy their groceries at the big supermarket chains and it’s important that those big supermarkets are doing the right thing by their suppliers. The release of these rankings is an important transparency measure that fosters greater competition within the sector. Holding big companies accountable helps encourage a race to the top.”

It comes days after several farmers and industry associations highlighted grave concerns about the viability of the fresh produce industry in Australia, partly blaming the conduct of the supermarkets and low wholesale prices paid to growers.

“We’re not retailing the right price to be able to keep the product moving and selling, plain and simple,” Victorian farmer Ross Marsolino, 61, from Natural Earth Produce said on Sunday. “The supermarkets are making too much profit out of our crops. We can’t survive.”

Shaun Jackson, 62, owner of melon producer Daintree Fresh in far north Queensland’s Lakeland, warned Aussie consumers face a looming crisis as growers “across the country” exit the industry.

Aldi was rated the best overall by suppliers. Picture: NCA NewsWire

Mr Jackson said he had spoken with “thousands of growers about their experience” with the supermarkets and “all of them are too scared to say anything”. “They’re absolutely terrified of retribution,” he said, claiming the supermarkets would “just stop buying a brand” if growers publicly complained about their contracts.

Michael Coote, chief executive of industry peak body AUSVEG, and Rachel Chambers, chief executive of Queensland Fruit & Vegetable Growers (QFVG), both confirmed there was a widespread fear of “retribution”.

“While the survey results of the 2023 report suggest the Code is working well and has helped to reduce the issues faced by suppliers it also highlights ongoing problems in the supermarket sector including delays in payment, unauthorised deductions from remittances and impediments to raising issues with retailer buying teams due to fear of damaging their commercial relationship,” Mr Leigh’s office said in a statement.

“The government is committed to improving conduct in the supplier/retailer relations. We have commenced the 2023-24 review of the Code provisions to ensure that they remain effective in fostering a vibrant and competitive food and grocery sector in Australia.”

A Coles spokeswoman said, in response to the report, that the supermarket “[continues] to work hard to build and maintain strong, trusted relationships with our suppliers”.

“Ongoing feedback and engagement are important to us, and we are reviewing the report closely,” she said.

“We conduct our own surveys and bimonthly pulse checks with our suppliers, which give us real-time feedback of where we need to focus. We continue to enhance our processes, host regular forums and maintain an active dialogue with our suppliers.”

Zero formal complaints were made through Code Arbiters in 2022-23. Picture: Supplied

Woolworths said it “[welcomes] the release of this year’s report as it is one of a number of sources of feedback we draw on to monitor the health of our trade partner relationships”.

“It follows on from constructive dialogue with Mr Leptos this year as well as the work of our highly regarded Code Arbiter, Helen McKenzie,” a spokeswoman said.

“The report notes the scope change to allow informal complaints has meant ‘faster, practical resolutions and improved supplier perceptions of the ease and effectiveness of raising issues with the Woolworths Code Arbiter’ when there are supplier concerns.”

She said Woolworths was “committed to investigating and resolving any supplier complaints fairly and expeditiously”.

“Our Trade Partner Complaints Integrity Policy makes our commitment clear — no supplier will experience commercial detriment as a result of raising a Grocery Code complaint with Woolworths,” she said.

Oliver Bongardt, managing director of national buying at Aldi Australia, said in a statement that the German supermarket set “high standards when it comes to collaborating with our suppliers, and we pride ourselves on being a fair and reasonable partner to them”.

“We value long-term relationships that are mutually beneficial, transparent and sustainable,” he said.

“This is highlighted by the longevity of our relationships, with some suppliers partnering with us since we first opened over 20 years ago. Seeing our values and how we do business reflected in the Independent Review is certainly heartening. We take our relationships with our partners extremely seriously because our low-price value proposition is only possible through our ongoing partnership with our extensive network of Australian suppliers.”

Metcash has been contacted for comment.

Originally published as Aldi named best supermarket by suppliers as grocery code reviewer releases public rankings for first time