“Extreme capitalism”, Aldi behind Woolworths axing SPC tinned tomato contract: Dick Smith

Image: ABC Rural/Michael Schilling

Entrepreneur Dick Smith has said Woolworths’ decision to end its supply deal with SPC Ardmona was the fault of tough competition from Aldi, which could eventually run Woolworths and/or Coles out of business.

Woolworths has said it is reviewing the prices and volumes – as it does every year – for the coming season. It has not guaranteed it will continue its five-year, $70 million contract with SPC for tinned fruit, which began in 2014, and has dumped SPC as a supplier of tinned tomatoes.

Dick Smith has weighed in, telling AAP that this was the result of intense price competition from German supermarket chain Aldi, as well as the result of “extreme capitalism”.

“It’s clear that Woolworths and Coles will have to either replicate Aldi, that is, move to around 90 per cent home brand products and reduce their product selection from over 20,000 to just a few thousand, while sacking most of their Aussie employees, or they will be sent into bankruptcy,” Smith told AAP.

“There is absolutely no doubt in my mind that Aldi, with its incredibly low overheads – they hardly employ any Australian staff – and its private ownership in Germany – they don’t have the high costs of public listing – will mean they will eventually send one or both of our Aussie shareholder owned food retailers out of business.”

The tinned fruit deal was announced in 2014, at a time when the survival of the Shepparton operations of SPC Ardmona – and hundreds of jobs in the Goulburn Valley – were unclear.

SPC received a $22 million Victorian government grant to upgrade its facilities at the time, with parent company Coca-Cola Amatil investing $78 million of its own money.