Australian Coke boss blasts supermarkets, notes pressures on food manufacturers

Terry Davis, the managing director of Coca-Cola Amatil, has spoken of the pressures facing food manufacturers during a speech to the Australia-Israel Chamber of Commerce.

Davis, who has slightly over a year left in his role, has compared the potential flow-on effects to what was seen in the clothing sector, which has seen large-scale job losses and a number of high-profile instances of outsourcing, such as those of Pacific Brands and Blundstone, after tariff reductions.

"I think what we're seeing now is the potential demise of Australian manufacturing as we saw in the textiles market and the footwear market 25 years ago," Davis said, in comments reported by News Limited.

"I think (the Australian dollar's) certainly a headwind that has placed enormous pressure on profits of companies in Australia, particularly in manufacturing. And when companies don't have profits, they don't invest, they don't employ more people and you have that terrible vicious circle."

Davis also had strong words for Australia’s supermarket duopoly and their strategy of increasing market share for their private label brands. The Australian Financial Review and others report him as saying those providing a brand in supermarkets that was not number one or two should consider leaving the market.

“Find an investment bank to sell your business,” Davis suggested.

“It’s terminal because after the space between No.1 brand and No.2 brand there is not much left and you have seen the attitude of the major retailers.”

The CCA MD’s remarks follow his comments in May, made after the company reported its first earnings decrease in seven years. At the time he said there needed to be a national debate about food manufacturing and living standards, after the CEO of Coles said Coke was two to three times more expensive in Australia compared to Thailand.