Brumby’s carbon tax blunder: What the baker should have done and what you can learn
Thursday, July 5, 2012/
Brumby’s felt the wrath of the Australian Competition and Consumer Commission yesterday after trying to blame price rises on the carbon tax, but the bakery franchise could easily have avoided this sticky situation.
It’s pretty clear now that Brumby’s managing director Deane Priest shouldn’t have sent a letter to all its franchisees telling them to start increasing prices as early as June and July, and to “let the Carbon Tax take the blame”, but what should Brumby’s have done?
Here are five things Brumby’s should have done:
1. Be truthful
The corporate watchdog is on the lookout for companies which are misleading consumers, so honesty is the best defence.
ACCC spokesman Duncan Harrod told SmartCompany that businesses need to be “reasonable and truthful with customers” about the impact of the carbon tax.
“It’s business as usual and if you have legitimate reasons for price increases, of course you can increase prices, but you shouldn’t seek to mislead consumers.
2. Calculate the electricity price increase
It’s not too hard to calculate any increase in electricity prices, so Brumby’s should have been able to work out any price increase flowing from that.
Iain Smale, managing director of carbon tax consultancy Pangolin Associates, told SmartCompany it is “a fairly simple calculation”.
“Brumby’s should have looked at the amount of electricity as a per cent of overall spend on a typical store and model on the fact the carbon price is around 9% of electricity bill. If electricity costs 3% per store you would be looking at a 0.29% increase.”
3. An in-depth study of the impact on key ingredients
For a large business like Brumby’s, Smale says it may be worthwhile doing a more in-depth study of the impact of the carbon tax beyond energy costs on things such as key ingredients.
“If they don’t do that, the only price rise they could attribute to carbon tax is due to electricity and they need to substantiate saying electricity is a certain percentage of the carbon bill. They need to be very clear in identifying what part of price increase is part of the carbon tax.”
4. Consider engaging a consultant
Businesses which are concerned about cost increases other than electricity may want to consider seeking expert advice to calculate the carbon price impact.
“If Brumby’s is just looking at electricity it can probably do that internally; as long as the impact is clear, it is a fairly simple calculation,” says Smale.
“But if Brumby’s wants to look at the impact of the carbon tax on flour, eggs, and milk, it makes sense to get an external consultant to look at that, as it provides some protection of having a fall back to third parties.”
Smale says the modelling Pangolin Associates has done shows an expected price increase in goods other than electricity in the order of 0.1% to 0.5%.
5. Review energy contracts
Finally, Brumby’s could have re-examined its energy contracts to see if costs could be reduced despite the advent of the carbon tax.
“Look at your energy contracts and explore ways to reduce energy cost; technology is changing,” says Smale.
“There are lower prices to implement upgrades and retro fits like changing lighting.”
Feel the churn: How to bounce back after losing staff and clients Sue Parker DARE Group founder
Own it: The 10 things you need to do to manage your personal brand Lisa Stephenson Who Am I Projects founder
How to call your team into action with a winning presentation Emma Bannister Presentation Studio founder
The link between diet and mental health — and how to eat your way to wellbeing Kate Save Be Fit Food co-founder
From interactive videos to AI: The five marketing trends that will dominate 2019 Warwick Boulter Collaboro co-founder
Australia is leading the legaltech revolution, but what does this mean for lawyers, firms and clients? Jodie Baker Xakia founder
Why a video news release needs to be part of your PR strategy Leisa Goddard Adoni Media managing director
Want to catch more customers? Here's how to create a super sales funnel Jovana Vujnic Bumper Leads founder