A major trade dispute has broken out between Tesco and Princes, resulting in the UK’s biggest retailer delisting more than 70 lines.
According to research carried out by The Grocer, Tesco delisted around 75 Princes products during the three months to 8 October. These included oil, canned meat, fish, pasta, soup, baked beans, as well as water and juice lines.
In the same period, Asda delisted eight Princes products, and Sainsbury’s just three.
It is understood that Tesco has contacted rival suppliers asking them to bid for listings that would replace the Princes lines.
Tesco continues to stock around 190 Princes lines, but many in the trade are expecting further culls until the end of Tesco’s financial year in February.
As well as supplying products under its own name, Princes brands include Napolina, Shippam’s, Crisp ‘n Dry and Jucee.
Most delistings so far have been Princes-branded canned meat and fish lines, but some Napolina olive oil SKUs have also been taken off shelves, as well as Crosse & Blackwell soups and Branston baked beans produced under licence from Mizkan.
It is not yet fully clear what the exact nature of the disagreement between Tesco and the Mitsubishi-owned Princes is. However, rival suppliers have told The Grocer that it may involve negotiations over annual lump sum rebates from Princes to Tesco.
One suggested Tesco was looking to scrap these in return for more price reductions, while another said Princes may be refusing to pay.
Princes refused to comment on the situation. A spokesman for Tesco said: “We keep our ranges under review to ensure we offer our customers the best value and choice available.”
The dispute has come as a surprise to many industry experts as Princes brands have been performing well.
Value sales of its canned meats have risen 7.9% year-on-year in a market down 5%, while its fish has risen 3.4% by value, ahead of the 2.3% market growth [Nielsen 52 w/e 31 August 2013]. Sales of Napolina oils are also ahead of the market, with value up 0.9% in a total cooking oils sector down 0.5%.
Princes is owned by Mitsubishi, with its UK HQ in Liverpool.
It’s not the first time: Premier Foods
The current dispute with Princes has echoes of Tesco’s row with Premier Foods two years ago.
In July 2011, an investigation by The Grocer into Tesco’s delisting of a quarter of Premier Foods’ branded lines forced the supplier to issue a shock profits warning to the Stock Exchange, admitting that the trading dispute had cost it £10m.
Between 26 March and 24 June 2011, the number of Premier products stocked by Tesco was reduced from 560 to just over 400.
The row erupted when Premier sought better prices from its retail customers in the wake of rising commodity costs, Tesco however chose to play hardball costing Premier - and its senior leadership - dearly.
Source
The Grocer news team
No comments yet