FED: Grocery business almost impossible to break into: Franklins

AAP General News (Australia)
04-01-2008
FED: Grocery business almost impossible to break into: Franklins

SYDNEY, April 1 AAP - Australia's grocery industry is so competitive that a new company
large enough to challenge Coles or Woolworths can only enter the market by acquisition,
a competing grocery chain says.

The Australian Competition and Consumer Commission (ACCC) kicked off its inquiry today
into the long-standing issue of rising grocery prices, with Coles and Woolworths named
as commanding 80 per cent of the packaged food business.

Another retailing group, Franklins Supermarkets, and a related company were acquired
by South African retailer Pick `n Pay in 2001 and now operates 80 Franklins sites across
NSW.

Franklins managing director Aubrey Zelinski and finance director Roni Perlov appeared
as witnesses to the ACCC inquiry in Sydney today.

Mr Zelinski said Franklins lost 13 per cent of its customer base when Coles and Woolworths
introduced petrol vouchers a few years ago.

"For an independent who doesn't own petrol, it's very difficult to compete," he told the inquiry.

He also said local council red tape and the scarcity of appropriate sites could delay
the establishment of new stores for up to six years.

Coles was due to open a store at a Sydney location where Franklins had been refused
a renewal of its existing lease, he said.

Mr Zelinski welcomed the inquiry, saying the business environment in Australia hindered
new entrants in any market.

"In terms of how they (Coles and Woolworths) use their buying power and their muscle,
hopefully is what will come out in this inquiry," he told reporters outside the hearing.

"I think that our business is a new business and the cost to do business in Australia
is a lot more difficult than anywhere else in the world," he said.

AAP vpm/wjf/imc/de

KEYWORD: GROCERY FRANKLINS

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