Ketchup in aisle three… or not. Yesterday, Kraft Heinz said it would temporarily stop supplying Tesco — the UK’s largest grocery chain — with its signature Heinz pantry products (think: ketchup, baked beans). There’s beef: Heinz wants to hike its prices to cover rising costs, but Tesco wants to keep prices attractive for its customers. Long story short: they couldn’t agree.
- Price-sensitive: In 2016, Tesco briefly removed some Unilever products from its website after the Dove parent tried to hike some of its prices by 10%.
- Tooth-sensitive: In February, Tesco blamed “short supply” for why Colgate’s toothpaste products weren’t in stock. But analysts say it was over pricing disagreements.
Don’t spill the tea… It costs a small fortune. Across Europe, consumer prices are hitting records as households struggle to afford everything from energy bills to cereal. Last month, nearly half of adults in the UK cut back on supermarket shopping, and it’s starting to happen in the US too. But grocery chains across the pond are taking different approaches:
- In the US, where food spending has remained relatively stable, grocery chains aren’t doing much to keep prices in check. Instead, we’re seeing smaller Doritos and Fruity Pebbles packages as food giants #shrinkflate to avoid higher price tags — or use creative ways to sell the same products at a premium.
- In Europe: Grocery chains like France’s Leclerc are taking on extra costs to “price shield” hundreds of popular products (think: pizza, pasta) so that customers keep spending.
Inflation has “checks and balances”… Price hikes allow food companies like Heinz to offset rising costs while keeping staples on the shelves. But by not accepting higher prices, grocery stores can keep shoppers spending and prevent them from turning to rivals. These checks and balances could help lower inflation — but a lot more checking will be required.