Lion boss pushes for a better deal for suppliers

Lion chief executive Stuart Irvine has called on the nation's supermarket duopoly to share with suppliers some of the proceeds flowing from their relentless attack on costs, arguing for an end to the combative relationship between Coles, Woolworths and food manufacturers.

In the midst of protracted and sometimes heated negotiations between supermarkets and suppliers to forge a voluntary code of conduct, Mr Irvine said it was time for the supermarkets to pass on earnings gained from greater supply efficiencies to grocery brand owners such as Lion.

"I think there are a lot of efficiencies that retailers and suppliers can make in the supply chain," he said. "And what's important is that we get to a point where we share what those efficiencies are in a win-win way. Some of those efficiencies we can do can cost us more but give a benefit elsewhere in the supply chain and that has to be recognised.

"When you get to those opportunities, you have to have a belief that your partners will share with you in what those benefits are. If you have got a collaborative, constructive relationship, you can do that."

Mr Irvine, who was appointed Lion CEO in January and is the former CEO of Nestle Russia and Eurasia, is one of the few suppliers to carry some weight with Coles and Woolworths. He sits atop a food empire controlled by Japanese conglomerate Kirin that has a sprawling portfolio, selling milk under brands such as Big M and Pura, a range of dairy foods such as Yoplait and beers such as XXXX, Tooheys and James Boag. But he also warned some frank discussions would have to take place.

"That's just the nature of the world and that happens here, in Europe and Russia, Germany, France, the UK and wherever I have worked," he said.

His arrival in Australia comes as Coles and Woolworths put a blowtorch to all suppliers to slash their costs and accept steep discounts and slashed margins.

Mr Irvine, who comes from Britain, where four large supermarkets control the industry, said he was aware of the highly centralised nature of Australia's market.

"It is a concentrated market, compared to what I'm use to," he said. "It means that we have to work harder in collaboration with those retailers."

He said he supported negotiations between suppliers and the supermarkets to develop a voluntary code of conduct to govern their relationships.

He said he had growth strategies for Lion, to help lessen its exposure to the Australian market and the recent loss of milk contracts with Coles, which would include an eventual launch into Asia.