Supermarket chain said they used 'every PR tactic possible' around move to cut price of milk to $1 a litre

After two years of a PR effort to persuade Australians that the major supermarkets’ “milk war” is not harming small dairy farmers, Coles has been caught out boasting about its successful media campaign to silence its critics and “win the day”.

In a presentation from June 2013, seen by Guardian Australia and uncovered by SBS TV’s the Observer Effect, Coles’ general manager of corporate affairs, Robert Hadler, said the supermarket chain used “every PR tactic possible to neutralise the noise” around its move to drop the price of milk in supermarkets to $1 a litre.

His presentation also refers to “grandstanding agri-politicians”, over a photograph of NSW Senator Bill Heffernan who is shown pointing into the face of Coles CEO Ian McLeod.

Another slide is titled: “There were the inevitable farmer protests...” with a picture of protest signs at a farm gate, with the next slide describing “angry farmer meetings”.

Queensland MP Bob Katter has described as “psychopathic” a reference to him as having “jumped on the bandwagon”, in a slide showing a picture of Katter’s dairy industry bill brought to parliament in February 2013. The bill sought to provide more leverage for farmers to negotiate contracts with processors and introduce minimum pricing in a bid to help those “struggling for survival against the might of the supermarket oligopoly”.

Asked by SBS’s Ellen Fanning about the continuing criticism from dairy farmer organisations over the so-called “milk wars”, Coles’ CEO Ian McLeod said, “well they would say that wouldn’t they?”

McLeod continues: “Things have to change. The country has to change. Productivity in Australia more generally has got to improve. Some of the highest manufacturing costs in the world are coming out of Australia.”

McLeod rejected suggestions that Hadler’s presentation showed Coles has been ruthless in its approach to dairy farmers and other suppliers. “I think that ruthless is the wrong word”, he said. “Determined and even relentless, but not ruthless.”

The Australian Competition and Consumer Commission (ACCC) is currently investigating whether Australia’s two largest supermarkets, Coles and Woolworths, have violated the Competition and Consumer Act 2010 in their dealings with producers and in their use of shopper docket petrol offers. In July 2011 the ACCC ruled that Coles had not breached the act by reducing the price of milk, saying that the cost had been borne by the supermarket chain.

Hadler said he “unreservedly apologise[s]” to both Katter and Heffernan, “if they are personally upset by the references.”

His presentation, entitled Coles - the consumer champion! A Reputation Management Case Study, was delivered to the Centre for Corporate Public Affairs (CCPA) in June but was no longer available to download on the CCPA website on Sunday.

It identifies significant negative “noise”, or unfavourable coverage, for the supermarket’s “Down Down” milk campaign, which peaked in the third quarter of 2011, the same year the price drop was brought in, and shows the regional press as reporting the most negative coverage in that time period.

The presentation goes on to identify the importance of guarding “against a political and regulatory response” to the supermarket’s drive to push down the price of milk. It also says that the “agri-political fallout continued after the ‘Down Down milk anniversary’”.

The presentation then details how Coles implemented new media strategies, including a social media campaign, the use of “fact sheets to debunk myths” and fresh advertising. It describes a “game changer” moment in the so-called “milk wars” as the implementation of multi billion-dollar ten-year deals to source milk directly with two farmer cooperatives, announced in April this year, which brought about an “immediate shift to positive coverage”.

Bob Katter, who left the National Party over the issue of dairy deregulation in 2001, told Guardian Australia he believed the presentation highlighted the supermarket giant had reduced the issue to a “marketing campaign”.

“I have to live with calamities [amongst dairy farmers] in my electorate, and to describe my reaction as climbing on a political bandwagon, I think psychopathic is the right word. No empathy, a complete lack of feeling,” Katter said.

Katter estimates that the number of dairy farms in Queensland has dropped from 1,545 in 2000 when the industry was deregulated to a projected number below 500 by the end of the year.

Speaking to Guardian Australia Robert Hadler said the presentation contained “no secret or confidential material”.

“The presentation used some graphics to make it engaging for a small audience of corporate affairs professionals.

“Both Bill Heffernan and Bob Katter are well-known and robust members of federal parliament whose views on milk pricing and retailers are well known. They are used to the rough and tumble of political exchange. However, if they are personally upset by the references, I unreservedly apologise.”

Hadler said that the presentation made no “pejorative comments about dairy farmers” but “merely noted that dairy farmer protests at what Coles did was inevitable”.

He added: “Coles has managed to improve its reputation with key stakeholders including politicians, the media and rural and regional stakeholders despite the controversial issues involved. We did this through open and honest dialogue and engaging with and active listening to stakeholder views.”

The full interview with McLeod will be broadcast at 8:30 pm on Sunday 29 September on The Observer Effect on SBS.