Our hand was forced. It was nothing personal. But they behaved so badly, we either got into line, accepted it and took a beating, or we stood up to them to make the point that they shouldn't be able to get away with things like this."
Fighting words from Will Chase, owner of snack food company Tyrrells, which turned giant-killer two weeks ago when it forced an about-turn from Tesco. Chase was unhappy with Tesco stocking Tyrrells crisps. "What pissed me off was the fact that they went behind our backs. If we were to go into Tesco we would be a mass product up against Kettle Chips and others. I'm sure there will be a point when that will happen, but I want the Tyrrells brand to be strong enough to stand up on its own before we go into that arena."
As a result of Chase's public rebuke, Tesco, which had sourced the product from a distributor, acquiesced. "We believe Tyrrells have good products, but if they do not want to sell them to Tesco we will of course respect that decision," a spokeswoman said.
The story will satisfy the UK's underdog-friendly masses - it is a particularly un-Tesco-like act to succumb to the demands of a smallish snacks supplier - but it also raises the question: have suppliers now started a supermarket backlash? Kettle Chips' decision to launch a brand solely for the independent sector proves Tyrrells is not the only one unhappy with supermarket practices. Supermarkets are not being allowed to stock its Kettle Kitchen brand and consumers have to go to delis, farm shops and fine food outlets to buy the product.
It seems while the supermarkets profess a heightened commitment to local producers - Tesco launched its regional sourcing initiative in the same week Chase pronounced his grievances - the suppliers themselves appear at boiling point. "These local initiatives are a total PR exercise," Chase says.
Ed Hudson, fmcg sector leader at Ernst & Young, is less cynical?. He says: "The big multiples realise they need local, differentiated products to provide excitement on their shelves. Local producers could start to feel more empowered as the pendulum swings their way and will be looking to now build up their brands, build a decent margin and, if approached by a supermarket, say 'fine, but here are the terms'."
The squeeze on margins is the chief bugbear for suppliers. Chase says: "Tesco doesn't care about the sustainability of the industry. They strip all the money out of the producer side. The sustainability is with the independents, who make a profit and pass some of that back to the producer." And the supermarkets' low-price agenda can have a knock-on effect. The Grocer has heard of one cheese supplier in Scotland who was berated by a long-term independent customer who found he could buy the cheese cheaper in Asda than direct from the supplier, for instance.
There's also the issue of loss of control. Supermarkets often dictate product characteristics such as weight and some suppliers would struggle to provide the volumes demanded. As a result Chase, who has received hundreds of e-mails and phone calls from other producers supporting his case, says he is simply voicing an increasingly popular view that small suppliers are better off without the supermarkets, focusing instead on independents and specialists.
If the supermarkets are committed to stocking local produce, as their local sourcing initiatives imply, then local producers could indeed find an element of negotiating power returning, particularly while the Competition Commission's investigation into supermarket practices is in progress. Hudson says that during the investigation Tesco et al will be concerned not to appear domineering. "It wouldn't be good publicity to be seen riding roughshod over a small producer, so they will be trying to appear whiter than white."
But even if that's the case, will other suppliers be willing to stand up themselves? Chase admits that turning away business can be hard, but he's not the first to have demanded a delisting.
Indeed, the speed with which Tesco caved in to his demands was perhaps an instance of once bitten, twice shy. Four years ago Tesco lost a three-year legal battle against Levi Strauss, which took the retailer to the European Court of Justice to stop it selling Levis jeans at a discount. Tesco had been sourcing the jeans cheaply from outside the European Union.
Now, many suppliers rebuff approaches from the multiples on a matter of principle. The Craigmyle Cheese Company, a small Scottish producer only set up two years ago, has attracted the attentions of the multiples with its award-winning products but remains loyal to the independent sector.
Liz Marchant, director, says: "We've been approached by three supermarkets now, and we haven't even entered discussions. We want to support the independents and specialists that care about the food."
That said, the Tyrrells spat was as much to do with sourcing processes as Tesco's behaviour. Tesco was able to source Tyrrells crisps because one of Tyrrells' primary distributors in Scotland sold product to another who then supplied Tesco.
If you are happy to sell to distributors are you not relinquishing the right to pick and choose your retailers?
Chase says it should not be in the interests of the distributor to supply supermarkets. "If you supply the independents you're getting far more margin so there's no sense in supplying the supermarkets." Nevertheless, there is often a tacit agreement between supplier and distributor where excess stock can be passed to the nearest available buyer in order to keep product moving. That can lead to loss of visibility, as happened with Tyrrells.
Chase maintains that his issue is with Tesco, which he says agreed not to stock his product, but then did so. This kind of practice needs to be challenged, he says.
Hudson is sure there's a growing notion among small suppliers that you don't need the supermarkets to succeed: "There's an increased interest from the public in other distribution channels, such as farmers' markets, independents and specialists, and as suppliers get better margins in those channels it makes sense to move towards them."
Chase suggests small suppliers would be wise to avoid supermarkets altogether while they build up their brands, although he has no qualms about working with Waitrose. It respects its suppliers, he says. "We just wanted to make the point that what Tesco did was naughty. They were going after the independents, stocking our stuff at a discount, and they needed smacking. No one's stood up to them before. It was time someone did."
It was a brave call. If other suppliers do the same that would ?really give ?supermarkets something to think about.
Fighting words from Will Chase, owner of snack food company Tyrrells, which turned giant-killer two weeks ago when it forced an about-turn from Tesco. Chase was unhappy with Tesco stocking Tyrrells crisps. "What pissed me off was the fact that they went behind our backs. If we were to go into Tesco we would be a mass product up against Kettle Chips and others. I'm sure there will be a point when that will happen, but I want the Tyrrells brand to be strong enough to stand up on its own before we go into that arena."
As a result of Chase's public rebuke, Tesco, which had sourced the product from a distributor, acquiesced. "We believe Tyrrells have good products, but if they do not want to sell them to Tesco we will of course respect that decision," a spokeswoman said.
The story will satisfy the UK's underdog-friendly masses - it is a particularly un-Tesco-like act to succumb to the demands of a smallish snacks supplier - but it also raises the question: have suppliers now started a supermarket backlash? Kettle Chips' decision to launch a brand solely for the independent sector proves Tyrrells is not the only one unhappy with supermarket practices. Supermarkets are not being allowed to stock its Kettle Kitchen brand and consumers have to go to delis, farm shops and fine food outlets to buy the product.
It seems while the supermarkets profess a heightened commitment to local producers - Tesco launched its regional sourcing initiative in the same week Chase pronounced his grievances - the suppliers themselves appear at boiling point. "These local initiatives are a total PR exercise," Chase says.
Ed Hudson, fmcg sector leader at Ernst & Young, is less cynical?. He says: "The big multiples realise they need local, differentiated products to provide excitement on their shelves. Local producers could start to feel more empowered as the pendulum swings their way and will be looking to now build up their brands, build a decent margin and, if approached by a supermarket, say 'fine, but here are the terms'."
The squeeze on margins is the chief bugbear for suppliers. Chase says: "Tesco doesn't care about the sustainability of the industry. They strip all the money out of the producer side. The sustainability is with the independents, who make a profit and pass some of that back to the producer." And the supermarkets' low-price agenda can have a knock-on effect. The Grocer has heard of one cheese supplier in Scotland who was berated by a long-term independent customer who found he could buy the cheese cheaper in Asda than direct from the supplier, for instance.
There's also the issue of loss of control. Supermarkets often dictate product characteristics such as weight and some suppliers would struggle to provide the volumes demanded. As a result Chase, who has received hundreds of e-mails and phone calls from other producers supporting his case, says he is simply voicing an increasingly popular view that small suppliers are better off without the supermarkets, focusing instead on independents and specialists.
If the supermarkets are committed to stocking local produce, as their local sourcing initiatives imply, then local producers could indeed find an element of negotiating power returning, particularly while the Competition Commission's investigation into supermarket practices is in progress. Hudson says that during the investigation Tesco et al will be concerned not to appear domineering. "It wouldn't be good publicity to be seen riding roughshod over a small producer, so they will be trying to appear whiter than white."
But even if that's the case, will other suppliers be willing to stand up themselves? Chase admits that turning away business can be hard, but he's not the first to have demanded a delisting.
Indeed, the speed with which Tesco caved in to his demands was perhaps an instance of once bitten, twice shy. Four years ago Tesco lost a three-year legal battle against Levi Strauss, which took the retailer to the European Court of Justice to stop it selling Levis jeans at a discount. Tesco had been sourcing the jeans cheaply from outside the European Union.
Now, many suppliers rebuff approaches from the multiples on a matter of principle. The Craigmyle Cheese Company, a small Scottish producer only set up two years ago, has attracted the attentions of the multiples with its award-winning products but remains loyal to the independent sector.
Liz Marchant, director, says: "We've been approached by three supermarkets now, and we haven't even entered discussions. We want to support the independents and specialists that care about the food."
That said, the Tyrrells spat was as much to do with sourcing processes as Tesco's behaviour. Tesco was able to source Tyrrells crisps because one of Tyrrells' primary distributors in Scotland sold product to another who then supplied Tesco.
If you are happy to sell to distributors are you not relinquishing the right to pick and choose your retailers?
Chase says it should not be in the interests of the distributor to supply supermarkets. "If you supply the independents you're getting far more margin so there's no sense in supplying the supermarkets." Nevertheless, there is often a tacit agreement between supplier and distributor where excess stock can be passed to the nearest available buyer in order to keep product moving. That can lead to loss of visibility, as happened with Tyrrells.
Chase maintains that his issue is with Tesco, which he says agreed not to stock his product, but then did so. This kind of practice needs to be challenged, he says.
Hudson is sure there's a growing notion among small suppliers that you don't need the supermarkets to succeed: "There's an increased interest from the public in other distribution channels, such as farmers' markets, independents and specialists, and as suppliers get better margins in those channels it makes sense to move towards them."
Chase suggests small suppliers would be wise to avoid supermarkets altogether while they build up their brands, although he has no qualms about working with Waitrose. It respects its suppliers, he says. "We just wanted to make the point that what Tesco did was naughty. They were going after the independents, stocking our stuff at a discount, and they needed smacking. No one's stood up to them before. It was time someone did."
It was a brave call. If other suppliers do the same that would ?really give ?supermarkets something to think about.
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