The Grocery Code Just Changed the Rules.
Has Your Leadership Team Caught Up?
The Mandatory Food and Grocery Code of Conduct commenced on 1 April 2025. It replaced the voluntary code that had been in place for over a decade.
The consequences are significant.
Food and grocery code penalties can now reach $10 million per contravention, or 10% of annual turnover, whichever is greater. For lesser breaches, the maximum sits just above $1 million.
The ACCC can also issue infringement notices with penalties of $187,800. The supermarket price-gouging ban takes effect on 1 July 2026. For mid-tier FMCG suppliers, this changes what leadership needs to look like inside their business.
The Power Imbalance Hasn't Gone Away
Australia's $143.8 billion grocery industry is controlled by a small number of players. Woolworths holds 38% of national supermarket retail sales. Coles holds 29%. Together, that's 67% of the market.
The inquiry also found that Coles and Woolworths sometimes only accept wholesale price increases if the retail margin is maintained or increased in percentage terms.
For suppliers with turnovers between $20 million and $150 million, that concentration creates a commercial reality most people outside the industry don't fully appreciate. Your two biggest customers can set the terms of the relationship. They always have.
What's changed is the regulatory framework around that relationship. Suppliers now have legal protections they didn't have before. But protections only work if the business knows how to use them.
Suppliers need grocery code of conduct leadership that understands how regulation, commercial strategy, and supermarket supplier strategy intersect.
FMCG Regulatory Compliance in Australia Is a Leadership Problem, Not a Legal One
Most mid-tier suppliers have treated the code transition as a compliance exercise. Update the contracts. Brief the legal team. Move on.
That approach falls short.
The ACCC grocery code 2025 fundamentally changes the terms of engagement between suppliers and retailers. It affects how agreements are negotiated, how disputes are raised, and how commercial terms are documented and enforced.
The ACCC has launched a new anonymous reporting portal where suppliers can flag potential code breaches without identifying themselves. That changes the dynamic significantly.
Some key obligations, including rules around contracting out of code protections, price formula requirements in supply agreements, and fresh produce forecasting obligations, were delayed until 1 April 2026. That gives suppliers a narrow window. But preparation isn't just about paperwork.
The businesses that will navigate this well are the ones with senior leaders who can read the regulatory landscape, anticipate how retailers will respond, and position the business accordingly.
That's not a skill you'll find on most commercial leadership CVs.
The ACCC's Enforcement Posture Is Clear
In September 2024, the ACCC commenced Federal Court proceedings against both Coles and Woolworths for alleged misleading discount claims. The regulator alleges Woolworths applied misleading “Prices Dropped” labels to at least 266 products, and Coles did the same with at least 245 products under its “Down Down” branding.
ACCC chair Gina Cass-Gottlieb named supermarket and retail sector conduct as a top enforcement priority for both 2025-26 and 2026-27. The regulator has also sought community service orders requiring both supermarkets to fund charities delivering meals to Australians in need.
The ACCC is actively pursuing the largest retailers in the country. Mid-tier suppliers should expect the same level of scrutiny as the code matures.
New Merger Laws Add Another Layer to Supermarket Supplier Strategy
On top of the code changes, Australia's new compulsory merger notification laws commenced on 1 January 2026.
This is the biggest change to Australia's merger regime in 50 years, shifting from a voluntary notification system to a mandatory administrative model.
For FMCG businesses considering acquisitions, joint ventures, or structural changes, the regulatory environment is materially different from what it was 18 months ago.
The ACCC expects to decide approximately 80 per cent of acquisitions within 15 to 20 business days.
Boards need to understand these implications. And they need leaders at the table who can factor regulatory risk into every commercial decision the business makes.
What This Means for Hiring
In my experience as a CEO inside FMCG businesses, the leaders who struggled most weren't the ones who lacked commercial skills. They were the ones who couldn't adapt when the rules around them changed.
According to KPMG's Australian Mid-Market Business Review 2025, 65% of mid-market businesses see cost and margin pressures as their biggest concern, and 29% say dealing with regulation is a significant issue. Those numbers tell you something. Regulation is rising on the agenda, but most businesses still aren't structured to deal with it at a leadership level.
The Grocery Code isn't a one-off compliance event. It signals a broader shift in how government, regulators, and the public expect FMCG businesses to operate. Pricing transparency, supplier fairness, competition reform. These aren't temporary themes. They're the new operating environment for FMCG regulatory compliance in Australia.
Mid-tier suppliers now face a practical question. Do they have senior leaders who can:
- Navigate regulatory frameworks alongside commercial negotiations
- Build and maintain relationships with government and industry bodies
- Assess regulatory risk as part of commercial strategy, not separate from it
- Lead internal change when compliance requirements affect how the business operates day to day
If the answer is no, the board needs to address it directly.
Boards Need to Act, Not Wait
The temptation for boards is to treat regulatory change as something the existing team will absorb. Add it to someone's remit. Send them to a briefing. Hope it works out.
That approach made sense when the code was voluntary. It doesn't make sense now.
The food and grocery code penalties are real. The ACCC's enforcement posture is clear. Australian grocery prices have risen 24% over 5 years, and the political and regulatory pressure on the sector isn't easing.
The leadership team, from the CEO down, needs the judgement and capability to operate in a regulated environment.
For many mid-tier FMCG businesses, that means making a senior hire they haven't made before. Or redefining an existing role to reflect what the business now actually needs.
The Window Is Narrow
Some code obligations don't take full effect until April 2026. The price-gouging ban follows in July 2026. That leaves limited time to prepare.
The businesses that use this time to assess their leadership capability, and act on what they find, will be better positioned. The ones that treat it as a compliance checklist risk being caught out when the regulatory environment tightens further.
Senior leadership decisions take time. Defining the role, running a proper search, and securing the right person isn't something you do in a few weeks. The time to start is now.
If you're a founder, CEO, or board member in FMCG and you're unsure whether your leadership team is equipped for what's ahead, it's worth having that conversation before the next deadline arrives.
ELR Executive is a specialist executive search firm focused exclusively on FMCG, food and beverage manufacturing, and fresh produce. If you're facing a senior leadership decision and want clarity before proceeding, a conversation with John Elliott may be a useful place to start.
