Saturday, June 22, 2024

The new Food and Grocery Code of Conduct

In early 2013, the Australian Food & Grocery Council, in response to member requests, led the negotiations towards the Food and Grocery Code of Conduct, which has been approved by Parliament and is now a feature of the grocery supply landscape, guiding the trading relationship between suppliers and retailers.

It is important to highlight that the Food and Grocery Code of Conduct (FGCC) is a voluntary code for retailers. Coles, Woolworths and ALDI have been involved in its drafting and are signatories to it. Even though it is a voluntary code (rather than mandated), it is still legally binding on all signatories.

Currently, Metcash has not signed the code, but has agreed to be bound by the components relevant to wholesalers for a period of 18 months. We are hopeful that in years to come Metcash will also sign up to the FGCC.

We are delighted that a small Sydney-based retailer, Aboutlife, has voluntarily signed up to the code. Hopefully, this will show others that the FGCC is not to be feared.

Costco and the IGA groups are aware of it and reviewing its progress and relevance to their businesses.

The intent of the code is to provide clarity, visibility and structure to the commercial elements of the trading relationship between suppliers and grocery retailers. Trading agreements struck with retailers under the mantle of the FGCC will identify “clearly and upfront” all of the financial exposure for both parties, allowing retailers and suppliers to fully evaluate the commercial benefits of the trading agreement. It is important to emphasise that the code is not intended to reduce the competitive nature of the Australian grocery market.

There are clearly going to be many implications of the new code for both retailers and suppliers. These range from the explicit exclusion of ‘shrinkage’ from supply agreements, to the regulation of ‘promotional payments’.

Arguably at this stage, of most pressing interest for suppliers is the fact that new grocery supply agreements will need to be signed with ALDI, Coles, Woolworths and Aboutlife within the next few months and certainly no later than July 2016. This will undoubtedly require both parties to fully appreciate, prior to any negotiations, the new framework created by the FGCC.

The Australian Food & Grocery Council (AFGC) is embarking on a number of initiatives to ensure the best possible understanding of the code and its implications for grocery suppliers. These include:

• The AFGC-certified training program and ‘code accreditation’.

• The AFGC website (www.afgc.org. au/our-expertise/industry-codes/food-and-grocery-industry-code-of-conduct/) with further dedicated information within the members’ section of the website.

• Legal support for AFGC members at code@afgc.org.au.

• A dedicated LinkedIn discussion group (Grocery Code of Conduct Australia).

• Ongoing case study development.

We are committed to supporting suppliers during the transition. There will also be ongoing features in Retail World exploring the issues and opportunities that the code addresses, and the ongoing AFGC Code training program.

For more information, contact AFGC Director, Industry Affairs Samantha Blake at samantha.blake@afgc.org.au.

A full copy of the code can be downloaded from the AFGC website.

Gary Dawson
CEO Australian Food & Grocery Council

Gary joined the AFGC as Chief Executive in July 2012, bringing experience in senior corporate affairs roles, politics and the media. In addition to his role as AFGC Chief Executive, he is a director on the boards of Foodbank and GS1 Australia.

Prior to joining the AFGC, Gary was director external affairs at Thales Australia, shaping strategy and corporate affairs for one of Australia’s largest defence and technology contractors.

He played a similar role at the ABC as director communications (2005- 2008), and with one of Australia’s largest professional member organisations, the NSW Law Society.

From 1999 to 2004, Gary worked as a senior adviser to prime minister John Howard, both in the prime minister’s press office and, from 2002 to 2004, as senior policy adviser on communications, media, science and innovation. He also spent four years working for ACT chief minister Kate Carnell.

Earlier in his career, Gary spent 15 years as a journalist, working in places as diverse as Sydney, Rockhampton, Emerald, Townsville and Canberra, with experience spanning newspapers, radio and television.

About Australian Food & Grocery Council
The AFGC is Australia’s peak industry body for food and grocery manufacturers and suppliers, representing a sector with annual turnover of $114 billion and directly employing 300,000 people, with almost half of these in rural and regional areas.

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