Three of Australia’s leading independent food distribution organisations have joined forces to take on Woolworths’ planned expansion into the B2B market in a “David and Goliath” fight.

Launched today, the Independent Food Distributors Australia (IFDA), made up of Countrywide Food Service Distributors, NAFDA Food Service and The Distributors, aims to tackle what they see as the retailer’s ‘aggressive and opportunistic’ behaviour.

It follows Woolworths’ proposed acquisition of a 65% stake in PFD Foods in a $552 million deal as it moves to further expand into the B2B sector, which IFDA Executive Officer Richard Forbes said was anti-competitive. The ACCC is currently reviewing the proposal.

IFDA is making submissions to the ACCC in objection to the proposed acquisition. Describing it as a “David and Goliath” fight, Mr Forbes noted Woolworths’ foray into liquor, saying the retailer had a history of quick expansion.

“Woolworths has a market share in the B2B sector of $240 million and they’ve said on the record they’re looking to expand to $1 billion in the next three years. We believe it will be a lot higher than that. They’re targeting all aspects of the market our members operate in and that our suppliers operate in and with their scale and size, they can obviously offer better terms,” Mr Forbes said.

“In doing so it means, we believe, that small businesses that cant compete will be forced out of the market. We believe that the ACCC and the government should watch this very carefully. The major supermarkets made about $1 billion each during the pandemic; they were the major beneficiaries.”

“Look at what Woolworths has achieved in the liquor market, it’s now up to 40-50% of the market. They’re saying only 6% of the market, but historically they grow and grow and grow and there’s already essentially a duopoly in retail market. We don’t want to see them take control of the food distribution market; too many small businesses owe their livelihood to the market.”

Mr Forbes said IFDA was also working to raise the profile of independent food distributors, the role of which was not currently fully understood by either state or federal governments, he said. Nor was their significant role in supporting small businesses.

Collectively, IFDA’s organisations’ represent over 200 independent, family owned businesses who together operate 266 distribution centres across Australia. Half of these warehouses are located in regional or rural areas and its members also play a role in supporting suppliers, manufacturers and farmers. Together, they also purchase and on-sell close to $5.5 billion worth of product.

Supplying essential services such as hospitals, childcare centres, schools, aged care facilities, the P&C sector and military bases, as well as commercial hospitality venues such as cafes, hotels and clubs, the income of many of its small business members has also been impacted  by the pandemic, in sharp contrast to the considerable profits gained by Coles and Woolworths, Mr Forbes added.

IFDA Chairman Richard Hinson estimated independent food distribution businesses lost up to 70-90% of revenue with the closure of commercial venues and  urged the ACCC and government to consider the important role IFDA’s members played in employment.

“Our Members play an important role in the food supply chain purchasing product from local manufacturers and farmers in their local communities to then distributing that food to over 100,000 commercial venues (Pubs, Clubs, Cafes, Restaurants) across the country. Our Members also provide food to thousands of small to medium size regional suppliers, manufacturers and farmers support us and they to, employ many thousands of Australians,” Mr Hinson said.

Other issues IFDA have highlighted includes more modifying JobKeeper to allow for more flexibility in the criteria, to better reflect current market conditions and to better support workers in the sector. As well as supporting the hospitality industry’s ‘Eat out to help out’ campaign; dropping the FBT tax on dining/business lunches to incentivise business custom; tax deductions for stock losses; and a further six month deferment on loans from the banks.

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