What Waiting for a Price Increase Costs: The Case of Woolworths and Coles

How long does a price increase take in Australia?

Since 1 April 2025, Australia's Food and Grocery Code has bound the largest grocery businesses. When a manufacturer asks to raise its list price (retailers call this a cost price increase), the retailer must reply in writing within 30 days: it can accept the increase, accept a smaller one or refuse. The manufacturer may then ask to negotiate, and a retailer that negotiates must do so in good faith and "take all reasonable steps to conclude its position on the negotiations without delay".¹ The list price is the manufacturer's decision, and the shelf price is the retailer's.

In the year to 30 June 2026, Woolworths told its Code Mediator that it gave 2,395 answers and missed the deadline four times; Coles gave 4,050, all on time.²³

Concluding the negotiations took much longer. Woolworths negotiated 867 requests, 36.2 percent of its answers (867 divided by 2,395). Of those, 637 ran past 30 days, or 73.5 percent. Coles negotiated fewer, 779 or 19.2 percent of its answers (779 divided by 4,050). Yet 688 of them, 88.3 percent, ran past 30 days. The other answers at both retailers led to no negotiation; neither report says how many were accepted in full. About one request in four at Woolworths (637 of 2,395) and one in six at Coles (688 of 4,050) ended in a negotiation that ran past 30 days.

Some were still open when the retailers reported: 113 at Woolworths and, at 30 June 2026, 149 at Coles. Of the negotiations past 30 days that had finished, half took 76 days or more at Woolworths and 71 or more at Coles. The count stops when the retailer concludes its position; the new price may take effect later still.

A legal deadline can make a retailer answer quickly, yet a negotiation that runs past the deadline in Australia typically takes ten to eleven weeks, so a manufacturer should plan for the wait.

What does the wait cost the manufacturer?

Take an invented manufacturer that sells 5 million units a year of one product to one retailer at a list price of 2.50 euros, its own decision. The retailer receives trade terms (discounts and allowances off the list price) of 20 percent, 0.50 euros a unit. The manufacturer's pocket price, the amount it keeps, is therefore 2.00 euros (2.50 less 0.50). Its net sales are 10 million euros a year (2.00 times 5 million).

Its cost of goods sold (COGS) has risen from 1.20 to 1.28 euros a unit, and it asks for a 4 percent increase in its list price, to 2.60 euros. With terms still at 20 percent, the pocket price rises to 2.08 euros. The extra 0.08 euros a unit recovers the cost rise exactly and is worth 400,000 euros a year (0.08 times 5 million).

Until the new list price takes effect, the manufacturer pays the new COGS but collects the old pocket price. The 0.08 euros a unit then comes out of its own gross profit, 1,095.89 euros a day (400,000 divided by 365). Over 76 days, the Woolworths median for negotiations that ran past 30 days, that comes to 83,287.67 euros (76 divided by 365, times 400,000).

The manufacturer decides when the 30 days start, because the Code counts them from the day it informs the retailer of the increase.¹ Retailers told Australia's grocery code supervisor that long negotiations come partly from "waiting on further input or response from the supplier".⁴ A complete case on the first day shortens the part of the wait that belongs to the manufacturer.

Each day a price increase waits costs the manufacturer its annual value divided by 365, so the manufacturer should ask early and, on the first day, bring its case on what the product is worth to shoppers.

Is a later start cheaper than a smaller increase?

A retailer that resists may accept only part of the increase and so ask the manufacturer to give up a point or two, meaning percentage points off the increase. In the example, a quarter off means 3 percent instead of 4. The pocket price then rises to 2.06 euros (2.50 times 1.03, less 20 percent terms). The manufacturer collects 300,000 euros a year (0.06 times 5 million) instead of 400,000. The concession costs it 100,000 euros in the first year and again every year after. The Academy's gross-to-net lesson says the same of a point of price given away in trade terms: "you pay it or collect it again every year the terms stay where they land".

The other option is to keep the full increase and start it 90 days later, a one-time cost of 98,630.14 euros (90 divided by 365, times 400,000). After one year the two cost about the same; after three, the later start has still cost 98,630.14 euros and the smaller increase 300,000.

The retailer gains what the manufacturer gives up, so one judged on the current year's figures has little reason to prefer either concession, and that is the retailer to offer the later start to. It works only if the full increase and its start date are agreed together; winning back a point later takes a fresh request, which in Australia restarts the 30-day clock.

In Australia the typical negotiation that runs past 30 days already lasts almost as long as the example's 90-day later start, so a manufacturer that waits ten weeks and then gives up points as well pays twice, once in time and again every year in price.

A delay is paid once and a smaller increase is paid every year, so a manufacturer should offer the delay first and decide in advance how much of each it can afford.

Is the increase worth asking for?

Before the first meeting, the manufacturer needs to know how much volume the increase can lose and still add profit. The Academy's lesson on break-even sales analysis calls this the break-even sales change (BESC): minus the price change, divided by the contribution margin plus the price change, both as percentages of the price. Absorbing the cost rise would leave the pocket price at 2.00 euros and cut the margin to 0.72 euros (2.00 less 1.28), or 36 percent of the pocket price (0.72 divided by 2.00). COGS is the only cost here that moves with volume, so this is the contribution margin. The increase adds 4 percent to the price, so the BESC is minus 4 divided by 40 (36 plus 4), or minus 10 percent.

As a check, absorbing the cost earns 3.6 million euros of gross profit (0.72 times 5 million). After the increase the margin is 0.80 euros a unit (2.08 less 1.28). The same profit then needs 4.5 million units (3.6 million divided by 0.80), 10 percent fewer.

Against the year before the cost rise, the increase can afford no loss of volume. The lesson's extended formula, for when cost moves too, uses the price change less the cost change in place of the price change; both rose by 4 percent of the pocket price, so the BESC is zero. The increase restores the old margin of 0.80 euros a unit, but it restores the old profit only if volume does not fall at all. The old position is no longer available, so the alternative to test against is absorbing the cost.

The lesson then compares the BESC with the expected change in volume and calls the difference the safety margin: how much worse than forecast volume can turn out before the increase stops adding profit. Suppose the retailer raised its shelf price by the same 4 percent, which is its decision (the Academy's elasticity lesson shows it can move by more). With a price elasticity of -1.5, meaning volume falls 1.5 percent for each 1 percent of price, volume would fall 6 percent (1.5 times 4). That leaves a safety margin of 4 points: the 10 percent the increase can lose, less the 6 percent expected. Gross profit would be 3.76 million euros (0.80 times 4.7 million units), 160,000 more than absorbing the cost.

On this planning case the increase is worth 160,000 euros a year rather than 400,000, so a 76-day wait costs about 33,315 euros (76 divided by 365, times 160,000). The order of the two concessions holds. A quarter off leaves a margin of 0.78 euros (2.06 less 1.28). If the retailer raised its shelf price by 3 percent, volume would fall 4.5 percent (1.5 times 3). Gross profit would then be 3,724,500 euros (0.78 times 4,775,000 units), 35,500 euros a year less than with the full increase. A 90-day later start costs 39,452.05 euros once (90 divided by 365, times 160,000). It is still the cheaper concession from about the fourteenth month (39,452.05 divided by 35,500 is 1.1 years).

An increase should be tested against absorbing the cost rather than against the year before, and the manufacturer should know how much volume it can lose before the first meeting.

What evidence should the case rest on?

The rules on evidence now point the same way in three markets. Australia's Code says a retailer "must not require the supplier to disclose commercially sensitive information" about an increase or its negotiation.¹ In the UK, the fourth Golden Rule for cost price increases, guidance from the Groceries Code Adjudicator, asks retailers to request only the information "needed to make a CPI decision", a decision on a cost price increase.⁵ In France, according to legal commentaries on a law of 18 August 2026, a retailer that asks a manufacturer to lower the price it has proposed for the food products the law covers must give objective evidence for the request.⁶

A case built only on a cost breakdown is cost-plus pricing. The Academy's lesson on willingness to pay gives the test: "when raw material costs fall, does your price fall? If yes, you are doing cost-plus." A manufacturer that justifies its increase line by line with COGS hands the retailer the argument for a cut when those costs fall.

The same lesson's alternative starts from what the product is worth to the shopper. In the example, a rival product sells at 3.40 euros on the retailer's shelf. The manufacturer's shopper research puts the value of the brand's differences at 0.60 euros, so the brand's total economic value is 4.00 euros (3.40 plus 0.60). The retailer sells the brand at 3.50 euros, so shoppers get 0.50 euros more value than they pay (4.00 less 3.50). The safety margin tells the manufacturer the increase is worth asking for and stays in-house; the 0.50 euros is evidence the manufacturer can share. Whether, and how much of, the increase reaches the shelf stays the retailer's decision.

The risk continues after the retailer accepts the list price. Suppliers told Australia's grocery code supervisor of cases in which a retailer accepted an increase but kept its shelf price, then used its lower margin to cancel promotions or flag the product for delisting.⁴ The shelf price is the retailer's decision. A case that shows what the product is worth to shoppers, and what it brings to the category, protects its place in the range after the increase as well as during the negotiation.

The rules in Australia, the UK and France can speed up the first answer and limit what a retailer may ask, but none of them sets the price or the length of the negotiation. The manufacturer controls when it asks, what evidence it brings on the first day and what it is prepared to give.

The decision to ask should rest on the manufacturer's own break-even, which stays in-house, and the case put to the retailer on what the product is worth to shoppers, because a case built on costs alone invites a cut when costs fall.

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