Tori Rutherford has been supplying Coles with honey for more than a decade. One of her products – the 400g squeeze bottle – will be removed from shelves in June, as part of the supermarket giant’s imminent product cull.
Coles has said its decision to get rid of about 2,500 products – or 10% of its range – is aimed at “simplifying” the shopping experience for customers.
But Rutherford, who runs a small honey packing business on the New South Wales south coast, believes the supermarket is getting rid of smaller brands so it can increase its profits. She says Coles is hurting small agricultural producers by cutting some of their products altogether and making them pay for price reductions on others in order to maintain its profit margins.
“It’s not going to be Kellogg’s, and it’s not going to be Heinz,” she says. “It’s going to be the small [brands] that people don’t notice, but they’re the ones that make the overall difference to the Australian economy.”
Rutherford runs Adleys Honey in Moruya with her husband, Chris. They employ one full-time person and one casual to package honey produced by small bee farms along the coast.
Coles grew its supermarket sales revenue by 4.3% to $20.6bn over the last six months of 2024, according to half-yearly financial results released on Thursday. It also expanded its profit margins in its supermarket business, and recently took market share from its larger rival Woolworths, triggering a bump in the Coles share price.
In addition to the 400g squeeze bottles, Adleys stocks 500g jars of honey at Coles stores across NSW and the ACT and 1kg tubs at a few local stores. Rutherford says while Coles has told them it will continue stocking their 500g jars, the supermarket wants to reduce the shelf price from $8.15 – and recommended $7.50 – in order for the product to “stay competitive”.
Rutherford says her category manager at Coles told Adleys it must absorb the full difference in price so that the supermarket can maintain its existing profit margin of 41.1%.
She says if the 500g jars were priced at $7.50, this would leave Adleys with a profit margin of just over 28.21%, compared to their previous margin of 34.79% – and that’s only if she and her husband don’t pay themselves a wage.
Coles’s chief commercial and sustainability officer, Anna Croft, told an investor meeting in November that the supermarket would be “simplifying” its range to remove “duplication” and “reinvesting in the categories in the space that makes the most amount of difference to customers”.
Rutherford says in reality, Coles is getting rid of more than 10% of its total range. In the spreads category, which includes honey, she says Coles has told her 45 of the 230 products will go – 19.5%.
One of those is the Adleys 400g squeeze bottle. After the product was marked for deletion in December, Rutherford came up with a new marketing strategy and tried to convince Coles to keep it.
Her presentation included photographs of “poor layout” issues at Coles stores across NSW and the ACT – which Rutherford says she had previously tried unsuccessfully to raise – including placement of different Adleys products on separate shelves.
In February, in an email seen by Guardian Australia, Coles wrote to the Rutherfords confirming the product would be deleted as its “sales volumes are below category average”. The product is still stocked by Woolworths.
Rutherford says the deletion will significantly affect her family, as well as the beekeepers who supply them with honey.
“When they’re cutting out all of those small brands … they’re not only taking away the choice from Australians, they’re actually affecting the industries on a whole because they’re taking away the fairness of it,” she says.
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A Coles spokesperson says it removed the Adleys 400g squeeze bottle because customers preferred to buy the 500g jar.
“We consistently review our range,” they say. “This is a necessary practice for any retailer to make best use of our limited shelf space for our customers.”
The Australian Competition and Consumer Commission says many suppliers have raised concerns about their reliance on the major supermarkets during the regulator’s inquiry into the sector, instigated by the Albanese government.
The ACCC says suppliers have concerns about their trading relationships with the supermarkets, including that it can difficult for them to negotiate and the prices they receive are sometimes below the cost of production.
The inquiry’s final report was due to be handed to the government by the end of February.
In its response to the ACCC’s inquiry’s interim report, Coles said it had “not been Coles’ experience that suppliers cannot successfully negotiate cost price increases”. Last year, in a submission to a separate, parliamentary inquiry into supermarket prices, Coles said “long-term, mutually beneficial relationships” with suppliers were “foundational” to its operations.
While Coles has the power to set its own retail prices, it said a “key driver” of price increases had been “cost price increase requests from its suppliers and farmers”.
Rutherford says her experience contradicts Coles’ claim.
“When we introduced our Adleys Honey 1kg tub a few years back, they unilaterally raised the shelf price without our consent to secure greater profits,” she says.
The Rutherfords received an email from their category manager in September 2021, seen by Guardian Australia, telling them Coles was going to increase the retail price of the 1kg tub from $12 to $14 before it hit shelves “to ensure it remains commercially viable”.
The Nationals leader, David Littleproud, who has pushed for reforms to the supermarket sector, says Rutherford was “extremely brave to come forward” with her concerns about Coles. He says a Coalition government would create a supermarket commissioner to act as a “confidential avenue” for farmers and suppliers to raise concerns.
Do you know more? Email catie.mcleod@theguardian.com
