The suggestion that hard-pressed families are being taken for a ride when it comes to food inflation is a pretty inflammatory one.

And even more so when it’s the chairman of the UK’s biggest supermarket, Tesco, pouring fuel on the flames.

John Allan told Laura Kuenssberg yesterday that Tesco had “fallen out” with multiple suppliers amid what has been a new year’s barrage of CPI requests, on top of the flood seen in 2022.

It even has a team, he said, that “can look at the composition of food, costs of commodities, and work out whether or not these cost increases are legitimate”.

It’s not much of an expression of trust in the supply chain. There will be plenty of suppliers tempted to replay the tape the next time Tesco claims they are 100% behind its latest Clubcard price freeze.

And it’s not the first time Allan, who is stepping down next year, has upset the apple cart.

Who can forget his remark about white men becoming an “endangered species” in the boardroom?

Then there was his call last year for a windfall tax on energy companies raking in huge profits on the back of the crisis, which left campaigners pointing out Tesco’s £2.2bn profits the previous year were none too shabby either.

But the latest controversy raises two big questions. First, did he go into the BBC studio deliberately to fan the flames and, more importantly, is there any truth in what he said?

It’s certainly not the first time either that Tesco has accused its suppliers of trying to push through unjustified price increases. Last year’s infamous fallout with Heinz was name-checked again by Allan, though he neglected to mention The Grocer story last week that showed Heinz has since hiked the prices of hundreds of its products, including on the shelves of Tesco.

Earlier this month, Tesco CEO Ken Murphy spoke, albeit somewhat less abrasively, about the “constant battle” Tesco had with suppliers to keep prices down.

So are suppliers the ones profiteering from inflation? Not so, according to Ged Futter, founder of The Retail Mind.

“Disingenuous is a word that came to mind when I heard John Allan speak about this,” he says.

“Especially when I had a call on Friday from a client who had successfully (eventually) got their cost increase through with Tesco only to see the actual display price put through three times higher.”

With Tesco on course for profits of at least £2.5bn this year, Allan’s comments are once more likely to smack of pots and kettles.

“It does frustrate me that so many companies have actually increased profits during this period of inflation,” says one supplier. Among those doing so are petrol/gas suppliers, energy suppliers, shipping lines, packaging suppliers and UK haulage companies, as well as supermarkets.

But he adds: “I am certain many suppliers to supermarkets have also increased their profits.

“The real question is, how much of our current inflation is due to extra profits? And could the rate of inflation actually be halved without the profiteering?”

Yet it’s beyond doubt that many food businesses are simply being forced to try to get through CPI requests because the alternative is oblivion.

Today The Grocer reports a coalition of trade bodies has written to business secretary Grant Shapps warning thousands will go to the wall unless the government rethinks its “paltry” energy bailout. Sadly, few will be holding out much hope that that is anything other than a waste of paper.

“Between Covid-19, Brexit, and now the Ukraine war, we have all been hit with unheard-of increases in commodity prices and also unending challenges with acquisition and retention of labour, commodity pricing, supply chain issues and now this horrendous cost of living crisis,” is how one MD describes the cost threat.

With such a brutal backdrop it’s tempting to have sympathy with NFU boss Minette Batters, who accuses Allan of “living in a parallel universe” to farmers and growers struggling to make a living.

It will also be interesting to see what impact his remarks may have on the Groceries Code Adjudicator’s ongoing survey on retailer behaviour.

Launching the survey last week, GCA Mark White told The Grocer supermarket buyers had been “overwhelmed” by the tide of CPI requests. But he has also promised to take action if they are found to have unfairly delisted products as a result.

It’s yet more fuel for the fire stoked, deliberately or otherwise, by Allan at the weekend. One thing is for sure: this flashpoint will not be the last.

 

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