Major suppliers accused of favouring supermarkets

Major suppliers have been accused of restricting supply to independent convenience stores while fulfilling high volumes into supermarkets. 

UK wholesalers claimed that Kimberly Clark, Heinz, Mars Food, Symingtons, Tilda, Princes, John West, Nestlé, Nutricia, Procter & Gamble, Warburtons, Molson Coors and SHS Sales & Marketing (for Reckitt Benckiser and GlaxoSmithKline) had restricted stock allocations, axed convenience-specific lines such as price-marked packs, raised prices or diverted deliveries away from the independent channel, leaving shelves bare. 

Meanwhile, supermarkets returned to near-normal levels of availability for the same brands.

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The Plunkett Foundation claimed actions left vulnerable customers who “shouldn’t or couldn’t go to a supermarket” without access to vital goods including medicines, baby formula, toiletries and core groceries. 

Harriet English, head of engagement at the Plunkett Foundation, claimed the issue was raised in a cabinet office meeting last week, and that individual MPs and the Department for Environmental, Food & Rural Affairs were also considering the problem.

“We’re getting calls from members all across the UK stating that they are still unable to get the essentials for their customers from their supply chains,” she said. “However, if you look in your local supermarket, they are very well stocked.” 

The NFRN is understood to have written to the Competition and Markets Authority to demand the regulator investigate allegations of unfair treatment of independents by suppliers.

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Describing why multiples get stock allocations ahead of independents, a senior source at one supplier told Better Retailing: “If they catch a whiff that you have stock elsewhere and you’re not fulfilling their orders, that’s a £10,000 fine and probably a delisting. When it comes to who is getting stock, it’s only going to ever go their way.”

Another supplier source claimed that insurance firms insuring the credit extended to wholesalers had attempted to cut their cover, therefore increasing the risk to suppliers when extending credit to smaller cash and carries.

“The problem in cash and carries is liquidity. We had more than £200,000 of bad debt accrue in March, after that point the insurers called the debt collectors in,” they said.

“The insurers also attempted to cut our credit cover by more than 30% last week – they are clearly panicking.”

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One major buying group member and another wholesaler told Better Retailing that Molson Coors had delisted core convenience lines, banned independent wholesalers from ordering some remaining supermarket-specific ones and restricted orders of all remaining lines. Both said despite shortages in independents, shelves were full in supermarkets.

Molson Coors denied claims it was favouring supermarket supply. The supplier’s off-trade sales director Kevin Fawell said: “By temporarily simplifying our range to focus on a smaller group of our core products, we can help to reduce some operational complexity in our customers’ supply chains. 

“We have therefore prioritised our most in-demand and popular lines, while ensuring that pack formats and lines available are suitable for all of our customers and channels.”

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Heinz was also among the most frequently criticised. One wholesaler said there was “clear evidence” of multiples being prioritised at expense of the independent sector. 

Another said that the tinned goods giant had increased their minimum order terms, making it harder for smaller wholesalers to secure stock.

Sources claimed Princes lines were “widely available across multiples”, but subject to significant availability issues for independents. Princes said it had capped all orders and increased production to meet demand.

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Tilda was shown to have cancelled substantial outstanding orders to wholesalers due to stock and “logistical challenges”, but again supermarket availability was high.

Tilda’s head of external affairs, Jon Calland, said the supplier was “continuing to supply the usual orders at the same competitive price across the multiple and independent sectors”.

Challenged on allegations of favouring supply to multiples, Symingtons said: “The sales uplift we are seeing to wholesalers has been in line with or greater than that to supermarkets.”

Although Nestlé disputed claims it was favouring supermarkets, it confirmed it introduced stock quotas on the Purina range, while introducing “fair share allocations” across its Nutrition products. 

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Despite frustration about major suppliers altering distribution, other suppliers were praised. 

Confex managing director Tom Gittins said: “Wrapex and Riva Foods are relaxing credit terms to ensure wholesalers continue to supply retailers.” 

Steven Smith, a volunteer at Findon Village Store in East Sussex, called for suppliers to better recognise the impact of their actions. He said: “We’re in a rural area where the multiples can’t or won’t operate. A lot of our customers are elderly and can’t travel, so these supplier’s actions are having consequences in vulnerable people’s lives.”

Find out more on our coronavirus information hub for retailers