Ahold, Unilever disagree about prices

Related tags Albert heijn Retailing Unilever

Who is stronger - the retailer or the supplier? When the two
parties in question are Ahold and Unilever, that is not an easy
question to answer, but a dispute between the two companies over
annual supply agreements may provide the answer.

A tug of war pitching one of Europe's largest retailers against the might of one of the world's largest food producers has been taking place on the shelves of Dutch supermarket chain Albert Heijn.

The chain, the largest in the Netherlands and part of the mighty Ahold group, second only to Carrefour in Europe, has taken the bold move of removing a number of Unilever products from its shelves following a disagreement over the price the Anglo-Dutch conglomerate is demanding.

Ahold's management is reported to have sent a fax to Albert Heijn store managers instructing them to remove around 30 or so Unilever products from their shelves - a drop in the ocean compared to the 100 or more products, both food and non-food, supplied by Unilever but nonetheless an unusual tactic in the notoriously hard negotiations between retailer and supplier.

"It is just a few versions of some brands that are not available in our shops, less than 30 of the hundreds of Unilever products we sell,"​ Albert Heijn spokesman Hans Koeleman said."We hope we can soon solve this incident, but that not only depends on us, it also depends on Unilever."

"We are in negotiations with Albert Heijn about supply conditions and now Albert Heijn is putting pressure with this step,"​ Unilever spokesman Tom Gordijn said, adding that it was rare to see such disputes in the Netherlands where relations between stores and food producers are generally good.

Neither party was willing to discuss what the dispute entailed, saying simply that it concerned the terms of annual supply agreements. But the dispute highlights the growing power of food retailers, who frequently find themselves in the firing line over their hard line stance with smaller producers and who, it seems, are now becoming increasingly tough in their dealings with the major players as well.

It is an interesting battle centred around who needs whom the most. The producers are dependent on the major retail chains to provide the showcase for their products, but supermarkets are equally as dependant on the major players to allow them to stock products which the consumer wants or risk seeing them do their shopping elsewhere.

But the supermarket chains' constant striving to push down prices as far as possible without reducing margins is likely to mean more battles of this sort in future years, although the likelihood of products as well known as Lipton tea, Magnum ice creams or Knorr soups and stocks disappearing from the shelves of one of the leading store chains is unthinkable.

Related topics Market Trends

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