European supermarkets boycott Nestle
Nestle, which in February reported its weakest annual sales growth in at least two decades, is under heavy shareholder pressure to boost sales and profit margins.
As if that is not enough, two retailers have expanded their boycott of Nestle, raising pressure on the Swiss food giant in a “price war” with several European food retailers, according to Reuters.
Germany’s largest supermarket group, Edeka, has written to its stores recommending that they drop more Nestle products in an escalation of a pricing row between the world’s biggest packaged food maker and European retailers.
Swiss retailer Coop, one of the country’s largest food chains, has also boycotted many products, including well-known Maggi seasonings, according to Swiss paper Blick.
Supplier-retailer tensions
Nestle has for several months been in hard negotiations with AgeCore, a Geneva-based group representing six European retailers, including Edeka and Coop, which is seeking better supply terms.
The escalation of the conflict is the latest sign of tension between retailers and suppliers at a time of changing consumer tastes and new online competition.
German trade journal Lebensmittel Zeitung cited a letter that Edeka had sent its 5,900 supermarkets suggesting that they stop ordering more Nestle products including KitKat chocolate bars, Vittel drinks and Wagner frozen pizza.
Up to 200 products
The boycott had, so far, affected 163 Nestle products, equal to around 20 percent of the revenue that Edeka generates from Nestle products, the magazine reported. That figure will rise to 30 percent with the expanded measures, the magazine said.
A Coop spokesman told website 20 Minuten that the chain’s boycott currently affected over 200 products, but the group later declined to comment on ongoing negotiations to Reuters.
In February, Coop said it had stopped orders of more than 150 Nestle products, including Cailler Perle chocolate, Nescafe Azera coffee and pizza brand Buitoni La Fina, demanding better supply conditions.
A Nestle spokesman referred to comments the company’s Chief Executive Mark Schneider made to a newspaper last week, while declining to provide further information.
“This aggressive approach, coordinated across Europe, (of withdrawing products from supermarket shelves to enforce price reductions) is new for Switzerland,” Schneider said.
Major consumer goods groups like Nestle, Unilever (ULVR.L) and Procter & Gamble (PG.N) are grappling with slower sales as consumers migrate toward healthier food and independent brands. The multinationals try to offset that by selling more high-priced items, but the retailers are reluctant to put up prices as they face their own battle with changing shopping habits and online players like Amazon.com (AMZN.O), according to several experts.
Recyclable packaging
Nestle wants to make all its packaging recyclable or reusable by 2025, the Swiss food giant declared Tuesday 15th of April.
“Plastic waste is one of the biggest sustainability issues the world is facing today. Tackling it requires a collective approach,” Nestle Chief Executive Mark Schneider said in a statement.
The world’s biggest packaged food company said it would focus on eliminating non-recyclable plastics, encourage the use of plastics that allow better recycling rates and eliminate or change complex combinations of packaging materials.
European governments have stepped up efforts to reduce plastic waste littering land and sea, and companies across the food supply chain are following suit.