Andrew Hall Director Corporate and Public Affairs

2

Agent of the customer

• Retailers are not the end of the supply chain – the consumer is

• Consumers view us as their agent – the apple they buy from us is a Woolworths apple – our responsibility

• Consumers expect us to do the right thing – to safeguard their health and safety, uphold quality and increasingly, buy ethically

• We need to work with suppliers who understand consumer pressures and share our values

• Our food supply chain is built on trust – our biggest asset

3

Complex and competing issues

Food miles

Recycling Carbon labelling

Waste

Low GI

Traffic light labelling

Fair trade

Sodium

Palm Oil

Deforestation

Marine Stewardship

Animal Welfare

Obesity

Value

Quality

Convenience

Country of origin

State of origin

GM

Local sourcing

Organic

Labour rightsPesticidesWater

Corruption

Diversity

4

UK consumer attitudes to green shopping

If it's easy27

What difference can I make?

38

Not interested24

"Crusaders"11

Source: M&S survey of 25,000 consumers, 2007

5

Consumer Segments

Source: 2009 GMA/Deloitte Green Shopper Study

6

Co-Operative Retail Group in UK

Ethical Priorities of UK Consumers

Climate Change4%

Packaging8%

Environment22% Animal Welfare

25%

Fairtrade27%

Other14%

Source: Co-Operative Group research published in The Retail Bulletin, 7 February 2008

7

Consumer trends - Fairtrade• 2009 sales of Fairtrade Certified products up 50% in Australia.

• AU$36 million in 2009, compared to AU$23 million in 2008.

• Fairtrade Certified coffee the most purchased product -70% of total retail sales.

• Fairtrade tea sales grew by 270% in 2008 and a further 100% in 2009 to AU$6 million in retail sales

Source – Fairtrade Australia.

8

Consumer Trend Indicators - 2009

Product Percentage Increase in sales*

Percentage of total category sales in 2009

Free range chicken 33.6% 6.4%

Free range eggs 32.0% 31.7%

*Percentage increases based on increased sales from 2008 – Woolworths supermarkets.

Source – Woolworths Supermarkets sales data 2008 and 2009.

9

Case study - animal welfare

• Animal activist raid on piggery in Tasmania

• Appalling welfare conditions in sow stalls

• Industry’s own auditing processes failed

• Woolworths worked with not against the farmer to rectify

• 60 Minutes story

• More than 3,000 emails and letters received to date

• Breakdown of trust right along the supply chain

-consumer to retailer

-retailer to supplier

-industry to industry body

10

Ethical sourcing

• Assessment of labour practices – freedom of association, fair pay and conditions

• Focused on international vendors in higher risk countries

• Part of terms of trade for everyone

• Recognise inherent bureaucracy for suppliers

• BUT – need to reduce burden without compromising consumer commitment

11

Global approach to harmonisation

• Global Social Compliance Program (GSCP) - part of the Consumer Goods Forum

• Top 30 leading retailers in the world

• Vision to harmonise existing efforts in order to deliver a shared, global and sustainable approach for the global supply chain

• Commitment to equivalency and reduction in complexity

• Huge task – beyond competitive difference

• Open source for ethical audits

• Increase auditing competency

12

Local ethical sourcing – policy

• One principle fits all – international and local

• Australia has a strong regulatory framework - but problems can and do occur

• We need to have a system of preparedness

• Positive health test for any business

• 70 trial audits completed with meat and poultry vendors

13

Local ethical sourcing – next steps

• Opportunity to evolve a more risk appropriate approach

• Move to self-assessment rather than formal audit for domestic vendors

• Audits to be undertaken on a discretionary basis

• Ethical policy conditional in terms of trade

• Support equivalence locally but commitment is to the consumer

• We will continue to refine the agenda in consultation with vendors and the PMA