Quantcast
Menu
Save, make, understand money

Experienced Investor

Tesco threatens to squeeze suppliers

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
02/03/2015

Following news last week that Tesco was to be investigated by the Groceries Code Adjudicator, the grocery giant is facing fresh controversy.

The chain wrote to suppliers, asking them to reflect recent falls in global commodity costs (notably in the wheat and sugar markets) in their product pricing – or face being dropped from shelves, in favour of cheaper rivals.

Tesco representatives have claimed that reductions in wholesale prices would be passed onto consumers, but suppliers responded that they received no guarantee from Tesco that customers would enjoy savings as a result.

The news comes only days after it was announced that the supermarket was to be investigated by the over allegations that it unfairly penalised suppliers, and offered to promote particular brands on prominent shelf spaces in return for sizeable sweeteners.

Tesco is attempting to restore faith in the public and investors after a year in which the firm were rocked by a number of public humiliations, including the departure of chief executive Phil Clarke and the suspension of a number of senior managers.

“We work with over 3,000 suppliers across the UK and hold regular discussions with them on how to provide the best products and great value for customers,” Tesco said in a statement issued earlier today.