Grocery suppliers squeezed by clients

24 January 2007
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24 January 2007 | Paul Snell

Over half of grocery suppliers have been forced to make payments to their clients for marketing or promotional investment.

A Competition Commission study into grocery sector supplier relations this week also revealed that demands for price reductions before, or even after, delivery had become more common in the past 12 months.

Just under half of suppliers felt this behaviour was unreasonable. One supplier said: "We do not have a choice, it's blackmail really." Another commented: "If you don't pay, you potentially lose your business."

The report also revealed that 67 per cent of suppliers had seen their profit margin reduce in the past five years. Suppliers blamed aggressive negotiations by customers as the main reason for this decline.

Yet suppliers were positive about their relationships with big clients, claiming they enabled them to invest in innovation, become more efficient and improve products. A third of suppliers said they had been asked to supply one client exclusively and one-fifth had entered into such an agreement.



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