Woolworths Group outgoing CEO, Brad Banducci faced hostile questioning this morning during his appearance before the Senate Select Committee on Supermarket Prices.

His counterpart from Coles will be up before the committee later in the day

While sparring with Greens Senator Nick McKim over the company's return on equity, Banducci was threatened with contempt for refusing to answer questions directly.

At one point McKim told him, "I feel compelled to advise you that it is open to the Senate to hold a witness in contempt when they refuse to answer a legitimate question. I also feel compelled to advise you, that this opens up a range of sanctions, personal sanctions that can be applied against you, if that's what the Senate decides to do."

Banducci was still testifying at the time of publication.

Opening statement

Earlier while addressing the committee, he discussing the key drivers behind grocery inflation. he said that Woolworths is witnessing falling rates of grocery inflation, but acknowledged the cost of living pressure on customers due to rising mortgage payments, rent and transport costs. Grocery prices have increased by a compound annual growth rate of 6% over the last two years.

"As we sit here today, we have lived through a very tumultuous five years - with COVID-related disruption, followed by rising interest rates and a period of sharply elevated inflation in the last two years," said Banducci.

Woolworths has taken steps to provide affordable grocery products, including holding Own Brand Products at Everyday Low Prices, offering Weekly Specials, a 'Best Unit Price' search filter on their digital platform, and donating over 34 million meals in the 2023 Financial Year. Woolworths is Australia's largest private sector employer and a vital participant in regional and rural communities.

"In short, we are part of a highly competitive, efficient and innovative grocery sector," Banducci added.

The supermarket sector is highly competitive, efficient and innovative, with the arrival and growth of ALDI, COSTCO and Amazon in Australia. Banducci acknowledged that grocery inflation is real and has been substantially driven by cost increases from their largest global Consumer Goods Suppliers, and cyclical impacts in domestic fresh food markets.

"That doesn't mean that consumers are finding it easy to make ends meet - grocery inflation is real and has been substantially driven by cost increases from our largest global Consumer Goods Suppliers, and cyclical impacts in domestic fresh food markets," Banducci explained.

"Grocery retailing is a high-volume, low-margin sector and Australia has one of the most efficient and productive grocery sectors in the OECD," Banducci noted.

Following Banducci's three-hour grilling, Coles CEO and MD, Leah Weckert, will be under the lights, joined by Coles government and industry relations manager, Vicki Bon.

The latest senate inquiry, established on 6 December 2023, was created to scrutinise and report on the price setting practices and market power of the major supermarkets. It's one of a number of active investigations into the supermarket space - the ACCC has also been appointed by the Prime Minister to lead a new price inquiry investigating the impact of online shopping, loyalty programs and technology changes on competition within the supermarket sector.

The government is also currently in the throes of reviewing the good and grocery code of conduct. Last week, former Labor minister, Craig Emerson, dropped the interim report and its recommendations, including a call for a new mandatory code of conduct as well as stronger regulation and punishment for supermarket chains to address market power concerns.