Heinz sales are steady, but was it really the winner in the Tesco dispute?

To the victor go the spoils. And the victor of fmcg’s biggest clash of 2022, it seems, is the one and only Kraft Heinz. 

As The Grocer revealed today, despite a headline-grabbing fallout with Tesco in the summer, the beans giant’s sales remained steady across grocery throughout the debacle (give or take a million quid in June – a negligible loss for a brand as big as Heinz).

What’s more, even though Tesco has kept the price of some core SKUs down, it has pushed through price increases on more than half Heinz’s range (excluding babyfood). 

But is it really fair to say Heinz won? What can we take from the saga, now the dust has settled?

First a disclaimer: the data used in our story is value only. We don’t yet know how much of that value was held up by higher prices. After all, Heinz had already succeeded in pushing through price increases in other retailers before the fallout with Tesco. So strong value performance may not necessarily reflect steady unit sales.

And there may well be trouble ahead for Heinz. That its products are now significantly pricier could lead to issues down the line – especially amid the cost of living crisis and with Britain facing a potentially terrible winter for the economy. 

People appear to have been willing to pay a higher price for the brand power of Heinz so far, but whether they will continue to do so remains to be seen. Own label sales are already on the up across many categories. That a single 415g can of Heinz beans now costs £1.20 – three times the 40p cost of a Tesco own-label can – will surely convince some shoppers to trade down.

That’s without factoring in the publicity around the dispute. Heinz, for all intents and purposes, ended up looking like a big American business putting the pressure on hard-pressed consumers. 

The truth is more nuanced: Tesco pitching itself as the stoic defender of consumers is a little eyebrow-raising when you consider that it led the market in hiking the price of olive oil (arguably as much of a staple for households across the UK as beans or ketchup) in July.

Tesco has also suffered fallout from the dispute, in that it has opened up opportunities to the discounters. Aldi didn’t sell Heinz beans before the dispute – now it does. Tesco is, sensibly, matching Aldi on the price of key Heinz SKUs. But if it lost shoppers to the discounters while its shelves were empty of key Heinz SKUs, it’s unlikely to regain them. 

Of course, Tesco isn’t the only retailer having pricing disputes at the moment. But because of its market share and its habit of letting the shelves go empty, its tussles with suppliers often command more attention with the public. The question is whether that’s doing Tesco more harm than good.