Unilever in supply standoff with major retailer

By Sarah Hills

- Last updated on GMT

Related tags Retailing Supermarket Unilever

Tension between Unilever and a major supermarket chain has resulted in the de-stocking of 250 of the manufacturer’s products because it was making strict demands over what the retailer should sell.

The Unilever products will disappear from Delhaize supermarket shelves across its 775 stores in Belgium once existing supplies have run out after annual negations between the two parties broke down in a dispute over product range and price increases.

A spokeswoman for Delhaize, which is one of Belgium’s largest food retailers, told FoodNavigator.com that they have suspended order for 250 Unilever products, including soups, sausages, frying oil, jam and the Lipton brand.

In a retaliatory move, the Anglo-Dutch consumer goods giant launched a one-day advertising campaign in key Belgian newspapers yesterday advising consumers that Unilever products were still available elsewhere.

It comes as retailers are under pressure to cut prices as consumer pockets are squeezed. At the same time there is increasing competition for shelf space between named brands and rival private label products or discount brands.

The Delhaize spokeswoman described the situation with Unilever as “exceptional”​ as it is the first time the group has had this problem with a manufacturer.

She said: “The products that are still on the shelves are being sold but we won’t put any new ones on the shelves.

“Unilever changed their buying conditions on the level of assortment, asking us to take all their innovations, all their products.”

She said that this included popular and less popular brands and added: “That is a problem for use because we constantly adapt our assortment according to the wishes and demands of our customers.

“We listen to our customer and if there is a certain trend we respond to it.”

The talks are ongoing and both parties said they hoped to achieve a satisfactory solution for everybody.

A Unilever spokesman said: “Each year, Unilever Benelux conducts annual commercial negotiations with retailers, during which parties discuss matters such as product assortment, new innovations, promotions and pricing.

“With regards to pricing, Unilever Benelux is currently negotiating with Delhaize - as it is with all of its customers - after implementing a price increase of 2.5 per cent.

“This is lower than the inflation rate in Belgium in 2008.

"Thus far, no new agreement has been reached with Delhaize for 2009, and for this reason Delhaize has temporarily decided not to sell a number of Unilever products.”

He added that Unilever was determined to continue dialogue and said: "It is important that our brands are available at Delhaize, just as they are at other supermarkets in Belgium.”

Market pressures

According to the Financial Times, Unilever last week admitted it was losing market share to private label products in Europe as it reported a 2.4 per cent drop in European sales volumes. It said that to offset sliding sales volumes, the company has been increasing prices.

The FT has also previously reported that Tesco is pressuring its suppliers as last year it asked some of its non-food suppliers to wait up to two months, rather than one month, to be paid.

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