Storm in a coffee cup over Aldi imports

IF your morning cup of Nescafe tasted not quite right this morning, you’ve probably been shopping at Aldi. Nestle Australia is at loggerheads with the discount supermarket chain over its importation of Nescafe instant coffee from Indonesia and Brazil.

While a jar of the Brazilian blend, Nescafe Matina, looks unlike any of Nestle’s Australian products, the Indonesian Nescafe Classic Deluxe comes in almost identical packaging to Nescafe Blend 43, the company’s top-selling brand in Australia.

But that’s where the similarities end – Nestle says it has been inundated with customer complaints since Aldi started selling the Indonesian product, which has a weaker taste than Blend 43 in order to suit Indonesian palates. Aldi sells the Indonesian and Brazilian Nescafe brands for $4.69 for a 200g jar – a discount of about 45 per cent to the $6.29 it charges for a 150g jar of Blend 43.

Nestle Australia in December told the Australian Competition and Consumer Commission it would refuse to sell any products to Aldi unless it agreed to clearly differentiate the imported brands from the local product in all advertising and displays.

Refusing to supply goods, unless the buyer meets certain conditions, is known as exclusive dealing and is generally prohibited under the Trade Practices Act, but the ACCC allows immunity if it believes the move to be in the public interest.

Aldi responded with signs on their shelves advising shoppers that the coffee is imported and made according to a different blend, “but we believe the quality of the product is as good”. Each jar also has a sticker noting its origins and that the “taste may differ to local product”.

But Nestle wants Aldi to take stronger measures, saying consumers are still unwittingly buying the imported brands and then complaining about the flavour, which could hurt the value of the Nescafe brand in Australia. Aldi has returned fire, accusing Nestle Australia of stifling competition by preventing the importation of a competing product.

The ACCC yesterday said it believed Nestle’s demands went further than necessary to sufficiently inform consumers, and proposed removing Nestle’s immunity against court action for exclusive dealing.

Both parties have until April 18 to make submissions on the ACCC proposal, which if it proceeds, will require Nestle to resume selling products such as Milo to Aldi. Aldi is understood to currently be sourcing Nestle Australia products from third-party distributors, adding a layer of additional costs to its usual direct sourcing model.