US grocery giant Kraft Heinz has stopped supplying some products to Britain’s largest supermarket group Tesco, which has refused to charge its customers higher prices for them amid rising inflation.
esco, which has over 27 per cent share of the UK grocery market, apologized for the lack of popular Kraft Heinz products such as baked beans and tomato ketchup on its shelves but said: “We will not pass on unjustified price increases to our customers. “
Kraft Heinz said it is struggling to offer reasonably priced products in a market hit by rising raw material and production costs.
Tesco said its customers have a wide range of branded and private label alternatives to choose from and hoped to have the problem resolved soon.
A Kraft Heinz spokesman said they are working closely with Tesco to resolve the situation as quickly as possible.
“We are convinced of a positive solution,” they said.
The dispute highlights the question of whether manufacturers, retailers or consumers should bear the greatest pain of rising cost inflation.
Tensions have been building across the system, with Tesco, the UK retailer, big enough to stand up to Kraft Heinz’s claims and Kraft Heinz being one of the few suppliers powerful enough to hold its own.
European retailers are locked in lengthy price negotiations with food giants, which have announced plans to raise prices to stem the impact of rising commodity costs, Reuters reported in February.
Britain’s No. 2 supermarket group, Sainsbury’s, said it still sells a full range of Kraft Heinz products.
In a similar series in 2016, titled ‘Marmitegate’, Tesco pulled dozens of Unilever products, including the popular yeast spread, from its website after the pound’s collapse, partly sparked by Brexit, fueled tensions between suppliers and retailers.
Kraft Heinz said that with raw material and production costs rising, it is looking for ways to offer customers value “through price, size and packaging” without compromising on quality.
Prices are rising after the war in Ukraine restricted supplies of sunflower oil and pushed up wheat and animal feed prices – pushing up the cost of meat, dairy and baked goods. Rising energy and fuel prices, as well as increased labor and transportation costs, have contributed to this.
Tesco said that with increasing pressure on household budgets, it has a responsibility to ensure customers are getting the best possible value.
In the UK, wages are struggling to keep up with inflation, which hit a 9.1 percent high in May in over 40 years and is heading towards double digits. Some forecasters expect food inflation to hit 15 percent this summer and 20 percent early next year.
Earlier this year, Ahold Delhaize’s Albert Heijn chain – the largest Dutch supermarket – removed Nestle products, including Maggi, KitKat and Nescafe, from its stores because Nestle had hiked prices.
This month, French food giant and world’s largest yogurt maker Danone said it was reducing the variety of products it sells as rising prices are forcing it to reconsider how it sells its products.
https://www.independent.ie/business/world/kraft-heinz-pulls-products-from-tesco-in-pricing-row-41803230.html Kraft Heinz pulls products from Tesco in price war