11 Jul 2022

What happened between Tesco and Heinz?

What happened between Tesco and Heinz?

In early July, a number of Heinz products disappeared from the shelves of Tescos around the UK as the two businesses struggled to agree on pricing of a number of key products. 

While global supply chain issues and the cost-of-living crisis were resulting in increased production costs for the food, sauce and condiment brand, Tesco released a statement saying: "Now more than ever we have a responsibility to ensure customers get the best possible value, and we will not pass on unjustifiable price increases to our customers."

After a few days of negotiation, the two businesses have come to an agreement and have released a joint statement, which read: “Tesco and Heinz are pleased to have reached an agreement that will see the full range of Heinz products return to Tesco shelves and online, continuing to offer our customers great value on the nation’s favourite Heinz varieties,” the companies said.

“Lorries full of Heinz products including Heinz Tomato Ketchup and Heinz Beanz will hit the road shortly, and Tesco colleagues will be working hard to ensure shelves are filled again over the coming days.

“With British summertime finally here, Tesco shoppers will be able to get all the essentials they need for their perfect summer salad or barbecue, including the Heinz varieties they know and love. It’s great to be back together.”

At this point it's unclear whether prices will ultimately be rising for Heinz products in-store. 

IFE spoke to Ged Futter, Director of the retail mind, about the clash. 

How common are these types of disputes in food & drink retail?

Previously it was very rare, but now it is much more common. There are examples of this happening in every retailer except Aldi, and in some retailers the same supplier has stopped deliveries on more than one occasion.

 

Do you think we might see similar clashes in the months to come as supply chain issues continue?

It will always be a last resort, but with increases higher than ever before and timescales shorter than ever it leaves suppliers with little choice. Most of these aren't in the public eye but they are happening all the time.

 

It's quite unusual for the retailer and supply to issue a joint statement– how are these disputes generally resolved?

They are usually resolved in private without any public statement, either one party gives in or there is a compromise. At the moment we are seeing more suppliers dig their heels in as they simply can not afford to supply at the old costs.

 

What is the balance of power between global brands like Heinz and retailers like Tesco?

It is a delicate thing and not a good idea for either party to abuse any power that they have. Global brands need to work with Tesco, not just in the UK but also with their international operations. Tesco needs to work with the brands as their customers expect to find them. The impasse that we have recently seen is not good for either party.

 

Do you have an advice for our food & drink brands who may be struggling to maintain their profit margins?

Prepare well, know what you need and then stick to it. Internal alignment and consistency are crucial. Don’t try and second guess anything at the moment, everything is uncertain so say this.

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