Gippsland Jersey Dropped by Coles

A small Victorian milk company, Gippsland Jersey, faces a major challenge after supermarket giant Coles removed its products from 65 stores. This decision comes after the company refused to provide Coles with a bigger profit margin. Starting next month, Gippsland Jersey milk will be available in only about 16 Coles supermarkets across Victoria. This leaves the business just two weeks to find new outlets for thousands of litres of milk.

Sallie Jones, who co-founded Gippsland Jersey with dairy farmer Steve Ronalds in 2016, expressed her shock and disappointment. “We’ve gone from being awarded Australia’s best milk to being removed from most Coles shelves, which is super disappointing,” she said. “Coles is a big business focused on margins, and we can’t meet their demands without risking our own financial stability. We can’t go broke just to keep our milk on Coles shelves. The power these big supermarkets have over our food system is immense.”

Jones is also concerned about possible further retribution from Coles for speaking out. Small, locally-owned food producers like Gippsland Jersey compete with large multinational companies and supermarkets’ own brands. Coles began sourcing milk directly from farmers in 2019. The competition watchdog recently cleared it to buy its own milk processing plants, raising concerns among farmers about losing transparency and bargaining power.

Data from IBISWorld shows that over 55% of supermarket milk sales are “private label,” meaning supermarkets directly sourced and branded the product. The introduction of $1-a-litre milk by the big supermarkets in 2011, which slashed prices by one-third, severely impacted the industry. Since then, the growth in private-label supermarket brands has made them the largest market for milk and cream products.

“Private-label milk remains cheaper than branded milk and has been more popular among consumers since 2018-19,” the IBISWorld report stated. “This trend will likely continue, with supermarket private labels competing strongly with branded milk and cream products.”

Much of the fresh milk and other dairy products sold in supermarkets are produced by foreign-owned companies, including major brands like Pauls, Devondale, Sungold, and Bega Cheese. The largest Australian-based fresh milk and cream manufacturer is French-owned Lactalis, holding a 13% market share and producing $638 million in revenue for 2023-24. Other major players include Canadian company Saputo and ASX-listed Australian company Bega Cheese.

Smaller local milk processors like Riverina Fresh and Norco Co-op are also being squeezed out by major supermarkets and multinational dairy companies. “Gippsland Jersey has to compete with that,” Jones said. “We’re just a little player, all about the heart and soul of our brand.” The prospect of disappearing from supermarket shelves has left her distraught. “I was getting emotional, asking, ‘How do we compete with this? How do we win?'”

Supermarkets have been accused of cancelling contracts or placing products poorly in stores if suppliers complain about their treatment. In response to ABC, Coles emphasised customer choice and its commitment to supporting independent and local producers. “From July, we will focus on selling Gippsland Jersey in 16 stores in Victoria, where we see the most demand for this local brand from customers,” Coles stated.

Farmers are reluctant to provide evidence to a parliamentary committee on supermarket prices without assurances that their supply agreements will be protected. Multiple inquiries have been launched into supermarket behaviour, with recommendations including hefty fines for mistreating suppliers and a mandatory supermarket code of conduct with financial penalties for breaches.

Jones is “100% concerned” about backlash from Coles for speaking publicly. “We wanted to inform our customers via Facebook that Gippsland Jersey won’t be available in most Coles stores after June,” she said. “We don’t want to be blacklisted by Coles; we need to work with these major supermarkets.”

Jones is now focused on finding new outlets for the extra milk. “If consumers want to support an Australian-owned company, they should have that choice,” she said. “Unfortunately, we’ll be removed from Coles. We’re hoping the phones start ringing so we can supply more stores and absorb the extra stock that won’t be going to Coles.”

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