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Heinz has paused supplies of a range of key products over the row, which has already left shelves empty in some stores and items out of stock on Tesco’s website.
A Tesco spokesperson said: “With household budgets under increasing pressure, 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.
“We’re sorry that this means some products aren’t available right now, but we have plenty of alternatives to choose from and we hope to have this issue resolved soon.”
The supermarket added it was “laser-focused on keeping the cost of the weekly shop in check” as food price inflation surges adding to the cost of living crisis.
Heinz said: “We are working closely with Tesco to resolve the situation as quickly as possible. In today’s challenging economic environment – with commodity and production costs rising – many consumers are working within tight budgets.
“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.”
Heinz was founded in Pittsburgh, Pennsylvania, in 1869, but since the early 1900s has produced its products for the British market in the UK.
New research for The Grocer trade journal using data from Assosia reveals a surge in prices of Heinz products in other supermarket chains over recent weeks.
The price of a 4x400g pack of Heinz Cream of Tomato Soup, for instance, has risen 40% from £2.50 to £3.50 in Sainsbury’s, while a 4x200g pack of baked beans Snap Pots is up 20% from £2.50 to £2.99 in Morrisons.
A single 415g can of baked beans in Asda has risen from 90p to £1.20 – the price all the major chains are now charging except Tesco, which charges £1, and Morrisons, which charges £1.19, according to the price comparison site Trolley.co.uk.
Similarly, Tesco is charging £3.15 for a 910g bottle of Heinz Tomato Ketchup, compared with £3.50 at all its major rivals except Morrisons, which charges £3.49.
Ged Futter, at consultancy The Retail Mind, which advises many supermarket suppliers, said the price rises at Heinz were not surprising given that costs were rising by between 20% and 40% across many categories.
He said the businesses he worked with had put up prices by an average of 25% in the past year as the price of energy, fuel for delivery vehicles, ingredients such as tomatoes and cooking oil and packaging materials such as cardboard and cans had all risen substantially.
“Tesco has said it is going to be ‘least and last’ with price rises and for suppliers they have to decide whether to give Tesco a better deal or if [all their clients] are getting the same deal and if Tesco don’t like it they are not going to deliver,” Futter said.
Tesco’s latest row with a major supplier comes six years after well-known brands including Marmite and Ben & Jerry’s were pulled from its shelves in a row with Unilever.
A deal was reached within 24 hours of that row going public after the share price of both companies fell.
Published in Business Matters, 30 June 2022