Woolworths CEO Roy Bagattini has refuted claims by its former chocolate supplier, Beyers Chocolates, that the retailer was the main reason the chocolatier entered liquidation.
Following the allegations and a week of negative public discourse, Bagattini publicly denied the claim, arguing that the group could not be responsible for the actions of a business that it had been separated from for over a year.
Beyers is a well-known chocolatier that manufactures and supplies a range of products to retailers. It is the group behind Sweetie Pie and Chuckles, which it had been producing for Woolworths.
Despite this, Beyers Chocolates is liquidating after 39 years of operation and over 3 decades as a supplier to Woolworths.
This closure is expected to affect 700 people who worked at Beyers.
The company recently expanded its operations to serve other clients, which became a core point of conflict between the chocolate-maker and Woolworths.
The expansion to serve clients other than Woolworths led the retailer to end its exclusivity agreement with Beyers, which the chocolatier said cost it hundreds of millions in revenue.
Founder Kees Beyers explained to 702 that it was almost impossible for the company to continue operating after it lost a customer that accounted for around 50% of its turnover.
“They pulled the plug on us, and the pressure of the debt just became too much, and there was no other option but to actually close down the business,” Beyers said.
However, following several media interviews with Beyers, Woolworths CEO Roy Bagattini said he felt compelled to publicly respond to the collapse of Beyers Chocolates.
In an interview with RSG/Moneyweb Radio, Bagattini said Woolworths did not want to air the issues in the public domain, but had to address Beyers’s allegations to protect its reputation.
“It’s our brand, and we take it very seriously when our credibility and certainly our ethics are called into question,” he said.
Not a David and Goliath scenario
Bagattini rejected the notion that Woolworths was a “goliath” in a David vs Goliath situation, and said that the group had nothing to do with Beyers’ liquidation.
He noted that the group had ended its relationship with Beyers over a year ago, and that the chocolatier went in the direction it did based on its own business decisions.
Bagattini explained that tensions with Beyers emerged in 2023 when the retailer discovered the supplier was allegedly producing similar chocolate products for competitors using Woolworths-developed intellectual property.
“Our team found out that he was supplying our direct competitors with products using and leveraging our Intellectual Property (IP),” he said.
Bagattini said Woolworths and Beyers had jointly invested millions of rands into developing formulations, recipes and products over many years.
“When someone does that, our competitive advantage gets leveraged against us, and that’s certainly something that we weren’t happy about,” he said.
According to Bagattini, Woolworths spent two years trying to resolve the dispute before eventually ending the arrangement.
“We’ve engaged with Beyers extensively over a two-year period to try and remedy the situation, but we weren’t able to come to terms on it, and so we ended up concluding the overall arrangement,” he said.
He said Woolworths had no issue with Beyers supplying other retailers, provided it did not involve products or IP developed jointly with Woolworths.
“The fact that he may have wanted to supply other retailers—no issue with that whatsoever—but don’t supply them with product that we’ve invested in creating and developing and give away our IP,” he said.
He also rejected claims that Woolworths’ introduction of branded chocolate products reduced Beyers’ sales volumes and pushed the company into financial distress.
“That’s not really correct. Up until the years preceding us concluding our arrangement with him, we literally doubled his business,” he said.
Bagattini claimed Woolworths had grown Beyers’ business by around 2.5 times over several years and had planned to allocate additional production to the chocolatier before the relationship deteriorated.
