Kraft Heinz products are returning to Tesco stores after the two companies resolved a dispute over price rises that led to empty shelves last week.
The global manufacturing giant had paused supplies of lines such as baked beans and tomato ketchup to the UK’s leading supermarket after negotiations between the two broke down over demands for cost price rises thought to be as much as 30%. Tesco said it was not prepared to “pass on unjustifiable price increases to our customers”, whilst Kraft Heinz highlighted that commodity and production costs were rising, and it was not prepared to compromise on quality.
In a joint statement released on Friday, Kraft Heinz and Tesco said they were “pleased to have reached an agreement that will see the full range of Heinz products return to Tesco shelves and online”.
They added: “Lorries full of Heinz products, including Heinz tomato ketchup and Heinz Beanz, will hit the road shortly, and Tesco colleagues will be working hard to ensure shelves are filled again over the coming days.”
It is unclear if the deal will result in Tesco customers having to pay higher prices for Heinz products, although there have already been rises in other supermarkets.
Ged Futter, director at consultancy The Retail Mind, said it was very likely that Tesco would have agreed to the price rises that Heinz wanted.
“[Tesco] has to have those products on its shelves,” he said, because Heinz products are available from so many other retailers.
The dispute put both companies under pressure given the size of the Tesco business and the popularity of the Heinz brand.
Brand owners and other suppliers are trying to pass on the rising cost of energy, ingredients, transport and labour to supermarkets, which in turn are trying to limit the amount they have to pass on as they battle for cash-strapped shoppers. Amid the cost of living crisis, recent industry data suggests more people are shopping in discounters and trading down to cheaper brands and own-label.
Last week, it was revealed that Tesco is also embroiled in a price dispute with Mars Petcare, the owner of brands such as Whiskas, Sheba, Cesar, and Pedigree. The manufacturer has paused supplies to Tesco, with stocks already running low in some stores.
Analysts have suggested that the disputes herald an era of more adversarial relations between retailers and suppliers.
NAM Implications:
- Point made…
- Then ‘Business as usual’.
- Thankfully there are businesses big enough to draw the lines…
- A question for others: Deep down, have you asked for enough?
