Pricing pressures prompt a supply dispute between Tesco and Kraft Heinz, with the grocer saying it won’t pass on unjustifiable price increases.

A dispute between Tesco and the makers of Heinz baked beans over price increases could mean shoppers struggling to find products.

Kraft Heinz, which makes some of the most widely bought food brands in the UK, is understood to have tried to push through price increases to reflect the rising costs of production.

But Tesco, which will be keen to keep prices on its shelves as low as possible amid a cost-of-living crisis, has pushed back, leading the American food maker to halt supplies of some products, understood to mainly be baked beans, ketchup and tomato soup.

A Tesco spokesperson said the retailer would “not pass on unjustifiable price increases to our customers”.

The Tesco spokesman said: “We have a responsibility to ensure customers get the best possible value, and we will not pass on unjustifiable price increases to our customers.

“We’re sorry that this means some products aren’t available right now.”

The spokesman added that the firm “hoped to have this issue resolved soon”.

Tesco said it had good availability across alternative brands, incuding Branston Baked Beans and its own brand ranges.

It said that where there were “genuine and justified cost pressures on a product” it would “work collaboratively with suppliers”, highlighting its recent £10m in support for the UK pig industry and new long-term contracts for UK egg producers.

A Kraft Heinz spokesperson said the company was “working closely with Tesco to resolve the situation as quickly as possible”.

The spokesperson said: “We always look at how we can provide value through price, size and packs so consumers can enjoy the products they love and trust at a price point that works within their budgets, without compromising on quality. We are confident of a positive resolution with Tesco.”

Rising food prices have helped push inflation to a 40-year high, according to the Office for National Statistics, with growing numebrs of households cutting back on the amount of food they buy.

Research by The Grocer, which broke news of the dispute, using Assosia data, shows prices have surged across the entire Heinz range in the other supermarkets over recent weeks, with rises for more than 230 products across Sainsbury’s, Morrisons and Asda since the beginning of June.

The price of a four 400g pack of its cream of tomato soup, for instance, has risen from £2.50 to £3.50 in Sainsbury’s, while a four 200g pack of Beanz Snap Pots has risen from £2.50 to £2.99 in Morrisons. A single 415g can of Beanz in Asda has risen from 90p to £1.20, Assosia data showed.

Steve Dresser, chief executive at Grocery Insight, said on Twitter that he “believed there are challenges over cost price increases here”.

Referring to the fact that matching Aldi’s prices could be borne by reduced margins at Tesco, rather than the grocer securing cheaper prices from Kraft Heinz, he said: “Some price challenges will be raw-materials based, but I wonder if some is Aldi price match-related, too. A number of lines are matched to Aldi, but who pays?”

Published in INews, 29 June 2022


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