Nestlé in price stand-off with European retail buying group

23 Feb 2018 --- Under pressure Nestlé is involved in a row with European retail buying group AgeCore over supply terms. One of Switzerland's largest retail and wholesale companies, the Coop chain, has reportedly stopped orders concerning around 150 Nestlé products, demanding improved supply conditions.

Some of the products include Cailler Perle chocolate, Nescafe Azera coffee and pizza brand Buitoni La Fina.

The world’s largest packaged foods maker, which is under heavy shareholder pressure to boost sales and profit margins, is understood to be carrying out negotiations in good faith and is hoping for a quick resolution.

A Coop spokesperson told FoodIngredientsFirst that “with regards to AgeCore's negotiations, we do not further comment on the subject at the moment.”

This comes at a time when many big players in the food industry are challenged with a shift in consumer preferences as tastes around the world are favoring healthier food and beverages as well as smaller, independent brands.

In many cases, manufacturers want to increase the prices of products to offset losses elsewhere, but this is not necessarily what the retailers want.

Brick and mortar stores are also facing their challenges as shopping habits continue to change as consumers are lured away from the store by the convenience of online purchases through giants like Amazon and a whole host of other e-commerce services related to food.

Earlier this month, Nestlé posted weaker than expected results, blaming “a challenging environment.” Net profit decreased by 15.8 percent to CHF7.2 billion (US$7.77bn) and earnings per share decreased by 15.8 percent to CHF2.32 (US$2.51) for the full year.

What is AgeCore?
The six European distribution companies Colruyt (Belgium), Conad (Italy), Coop Group (Switzerland), Edeka (Germany), Eroski (Spain) and Intermarché (France) founded the strategic alliance AgeCore, which is based in Geneva, Switzerland, in 2015.

The six distribution groups, totally independent of each other, together represent an annual turnover of €140 billion (US$172 bn). The alliance is present in 12 European countries, through more than 22,000 points of sale.

With the AgeCore strategic alliance, the six distributors have allied capable of meeting the growing challenges of competition in Europe and the growing internationalization of food retailing.

Through the joint negotiations, the members of the alliance want to offer customers better prices, build strong partnerships at the international level especially with the food industry.

Nestlé is not the only manufacturer to be involved in a supply spat with retailers. Last March, Tesco in the UK stopped selling Heineken beers for a period and in October 2016 Unilever resolved its price war with Tesco and said Ben & Jerry's, Marmite and its other well-known brands will be “once again be fully available” at the UK’s biggest supermarket. This followed a row over prices of certain brands which were temporarily not as readily available in Britain.