Wesfarmers stoop up to its decision to apply considerable discounts to liquor and dairy products. Coles' parent company started engaging in aggressive price discounting as part of its efforts to rebuild the reputation of the retailing giant.

According to The Australian, Wesfarmers chairman Bob Every says their main intention is to offer value to clients as part of its long-term plan to restore customer loyalty and enhance the profitability of the business.

Coles has been offering deep discounts for its beers, wines, eggs and milks, causing other retailers to do the same and forcing some suppliers to cite a law provision that allows them to withdraw supplier to stop their products from being used as loss-leaders. The company says it acknowledges the dairy farmers' concerns but that they do not intend to harm the supply chain. The intent was purely to offer value to customers.

As the biggest source of earnings for Wesfarmers, Coles' EBIT contribution rose by 18.3 percent as it grew in sales faster than competitor Woolworths.

According to chief executive Richard Goyder, milk sales at Coles had a 20 percent growth after it had cut the price to $1 per litre in January. Aldi and Franklins and arch-rival Woolworths were all forced to follow suit.

Goyder says that regaining the trust of customers and offering them more value were what they lost in the old Coles days. There was no intention to hurt the supply chain but they desired to see a lively farming sector.

However, Coles' moves, albeit a noble one, have set off the call to set a minimum milk price as a way to reintroduce industry protection.

Politician Nick Xenophon has appealed to the Australian Competition and Consumer Commission to get involved, saying that the laws that have allowed Coles and Woolworths to control the price of milk were "a joke".

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