Martin Smith on "charm offensive" with winemakers

Endeavour Drinks Group managing director Martin Smith has arranged to meet with winemakers and industry leaders in South Australia's Coonawarra region - according to a Fairfax report - to discuss the recent court ruling that Woolworths didn't "act unconscionably" in implementing it's "Mind the Gap" scheme.

The scheme saw the company demand as much as $60 million from suppliers in 2014 to cover a $50 million shortfall in its half-year profits.

Federal Court judge David Yates ruled Woolworths' “Mind the Gap” scheme had not contravened Australian Consumer Law. 

"I accept Woolworths' submission that a party's 'legitimate interests' will extend to include its interest in pursuing its lawful business in a profitable way and in a manner that minimises its costs," he said.

A Woolworths spokeswoman told Fairfax the visit was "part of our regular ongoing commitment to support and partner with the Australian wine sector", and said it wasn't connected to the December ruling on its treatment of suppliers.

However, one source said there was "no doubt [Woolworths] is on a charm offensive."

"The general view is that as Woolworths regains momentum they'll be ratcheting up the pressure to claw back margin from suppliers anywhere they can, to repair profitability – charm offensive or not," he said.

Suppliers have expressed concerns about the potential consequences of the December court ruling. 

Gary Dawson, chief executive of the Australian Food and Grocery Council, which represents packaged food, drink and grocery manufacturers, said it would be "pretty appalling if it [the ruling] were seen as a green light to do the same thing again."

In a further overture to suppliers, Woolworths has offered them access to its customer data via a new portal called “Supplier Connect”.  

The portal was launched to an initial group of suppliers on ­October 27, 2016, and will be available to all suppliers by the fourth quarter of 2017.

“Our new ways of working have been developed over the last nine months with significant input from a number of our suppliers,”  Woolworths head of buying Steve Donohue wrote in a letter obtained by The Australian. “This engagement has enabled us to deliver a program that we are proud of. The key principles ­behind the development of Supplier Connect are: increased transparency, consistency and a focus on customer centricity. All of which I believe are ­important elements of successful trade partnerships.

“The success of Supplier Connect is dependent on changing our ways of working to enable transparent and consistent engagement both on a daily basis and in the creation of medium to long term plans,” the letter said. “Our aim through Supplier Connect is to create an environment conducive to delivering mutual outcomes that will ultimately benefit our customers.”