Woolies’ PFD deal faces industry pressure as rivals band together

A number of food distributors have banded together to oppose Woolworths’ proposed $552 million majority acquisition of PFD Food Services.

The National Association of Food Distributors of Australia, The Distributors, and Countrywide Food Service Distributors have together formed Independent Food Distributors Australia to represent the interests of the industry, and have begun a co-ordinated campaign against the supermarket.

The new industry body claims that the deal would give the supermarket a large share of the market and the ability to provide cheaper, private label groceries to childcare and aged care facilities.

“[The acquisition] would be a disaster for the industry and the consumer,” NAFDA chief executive Brad Lee said, according to the Herald Sun.

“Hundreds if not thousands of small, bespoke food producers who are currently supported would find it a significant challenge to be able to meet the supply criteria that Woolworths demands.

“For the consumer it would mean reduced range and a proliferation of private label across the out-of-home food sector.”

However, a Woolworths spokesperson said the food distribution sector is highly fragmented and that its investment in PFD wont reduce customer choice.

“We have no presence in food service right now, and believe our investment will not only help PFD grow its business, but also add to competition and lift service levels across the industry,” the spokesperson said.

Under the deal, PFD will continue to run as a separate business to Woolworths, and will retain its management structure.

PFD chief executive Kerry Smith told the Herad Sun the deal wouldn’t change the stake the distributor already has in the market, and that the industry would have the same amount of players.

“[The deal] allows us to continue to run our business and innovate in the food industry, but also secures the long term jobs of the [3000] people we so proudly employ,” a PFD spokesperson said.

The IFDA is gearing up to make a submission to the ACCC, which recently said it will be launching a formal review of the deal.

The ACCC is accepting submissions until October 9, and will release its findings, or a statement of issues, on December 10.

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