PMP pain continues as Coles ends $15m deal

It is believed that PMP and Salmat were advised of the outcome of Coles's distribution review on Wednesday evening.

PMP has lost a string of contracts with large companies this year after it was discovered that some clients had been overcharged and a significant number of customer catalogues were delivered late or dumped in bins.

As the scandal spread, clients were lost. The discount department store Kmart, owned by Wesfarmers, switched the contract to distribute its catalogues from PMP to Salmat, losing PMP an estimated $15 million a year.

A $10 million-a-year contract to print and distribute catalogues for Myer was also lost.

As part of the industry upheaval triggered by the allegations about PMP, Coles had already moved its catalogue distribution business to Salmat, but was yet to decide upon a permanent home for the contract.

This week the food and liquor group formalised its relationship with Salmat. It is believed Coles is also reviewing a $30 million-a-year catalogue printing contract that is presently handled by a consortium of printers made up of PMP, Independent Print Media Group, AIW Printing and Franklin Press.

A spokesman for Coles said yesterday: "Following a tender process, Coles has awarded its national catalogue distribution business to Salmat.

"The contract term runs for two years. Coles distributes approximately 7 million catalogues each week to homes across Australia. Salmat have been managing Coles' catalogue distribution business since January 2009."

PMP's share of the catalogue distribution market is reported to have fallen to 35 per cent from 50 per cent in 2008-09, while Salmat's share of the market rose from 50 per cent to 65 per cent in the same period.