Australia’s biggest brewer Foster’s says it stopped its beer shipments to Coles and Woolworths for a few days this month because the two major retailers had resorted to selling the product at below cost.
Carlton and United Brewery (CUB), Foster’s beer division, said the two retailers, engaged in a cut-throat price war, would have damaged the brewer’s image if the beer, including VB, was sold at $28 a carton.
“We have withheld supply from a number of customers for a short period where we believe they have been selling our product below cost for the purpose of loss-leading,” CUB spokesman Troy Hey told AAP on Wednesday.
“We have done so to protect the brand equity – the image of our brands – and we don’t do this lightly.”
The idea behind loss-leading is to get customers into the shop and then try to sell other products at higher prices.
The brands involved other than VB were Carlton Draught, Pure Blonde and Crown Lager.
The withdrawal of supply was nationwide and involved Coles’ First Choice liquor stores and Woolworths’ Dan Murphy chains along with some smaller independents.
Mr Hey said the brewer is not allowed to have pricing negotiations with retailers but it told the retailers that it was stopping supply because they planned to sell at below cost.
“All we can do under the specific section (of the Trade Practices Act) was to withhold supply and we’ve done so in each instance for a couple of days,” Mr Hey said.
It was only the second time that Foster’s had taken such action.
Mr Hey said beer was withheld to an independent retailer last month.
Coles and Woolworths control around 50 per cent of liquor distribution in Australia.
Comment was being sought from Coles and Woolworths.