Supermarket giant Tesco has pulled Heineken products from its shelves over a disagreement over price rises.
Eight brands out of a total of 53, including Amstel, Kingfisher and Sol are amongst those that shoppers will no longer be able to buy in Tesco. A further 22 Heineken-owned beers could also be removed from the store’s roster.
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- September 25, 2017
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In January, the Dutch-based brewer announced it will increase prices by an average of 6p per pint, as a result of the “prevailing economic conditions” that caused sterling to fall since the Brexit vote in June.
This is the second time Tesco has taken on a brand because of price increases. Last year, the supermarket pulled many Unilever products from its shelves, including Marmite and Ben & Jerry, after Unilever wanted to raise above-board prices of about 10 percent for its brands.
Unilever eventually backed down, saying at the time: “We have been working together closely to reach this resolution and ensure our much-loved brands are once again fully available.”
A spokesperson for Tesco told the Guardian:
“We always put our customers first and we are pleased this has been resolved to our satisfaction.”
Tom Berry, associate retail analyst at GlobalData, believes we could see Heineken backing down, the same way Unilever did last time.
“Unilever is a much bigger company than Heineken,” Berry told Verdict. “This shows Tesco took on a bigger company and won to an extent.”
Tesco is the biggest supermarket brand in the UK, with just under 30 percent of the market share, which puts it in a strong position to negotiate prices in this way. As well, it is in Heineken’s interest to negotiate with them.
“They’ve got so much power in the market, particularly against the smaller players outside of the big four. A smaller store couldn’t do something like this, they would have to front the cost and deal with it,” said Berry.
“And, the amount of sales Tesco will be producing for Heineken means they’re a pretty important customer to keep happy.”
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Ultimately, it is in the best interests for the consumer to have Tesco fighting battles like this. It benefits Tesco because they can keep the prices down, but this means consumers will trust the supermarket and keep coming back.
“Tesco’s margins are so tight and food and grocery is under pressure across the board. Any point where they can mitigate those price rises and keep prices down when competitors can’t necessarily do the same thing is a win-win for Tesco.”
Yesterday it was announced that UK inflation has reached its highest level in four years, pushed up by rising fuel and food prices. This means that we could expect to see price rises across the board over the next few months.
“We’re expecting to see prices rise significantly in terms of food and groceries for the rest of this year particularly and the next few years,” said Berry.
“Tesco does have the power to say no, and get them to meet somewhere in the middle, probably nearer Tesco’s end of the spectrum. I would be very surprised in the six percent did come all the way through, but prices certainly won’t stay flat.”
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