Several Belgian supermarket chains, including Delhaize and Lidl, are currently not selling Danone products. They claim that the French diary producer demands “unacceptable” price hikes.
Empty shelves
Instead of yogurts, customers at Delhaize supermarkets see a little notice when they look for their Danone products. “Dear customer, Delhaize wants to offer its customers products at competitive price levels at any time. Due to difficult negotiations with the supplier, several products are not available for now. We apologise for any inconvenience caused”, it says.
Retailers do not often openly communicate about such conflicts, which makes analysts think that Delhaize’s aim is to make a statement towards its customers. Spokesperson Roel Dekelver admits that difficult negotiations are the reason for these empty shelves: “Suppliers have come to negotiate price hikes more often than usual this year. While we are not blind for the situation, we could not match Danone’s demands with the current reality. As such, we could not accept them.” In comparison, other dairy suppliers did not demand such high price increases.
“We know this is not convenient for our customers, but we have a wide offer of dairy products and there are alternatives aplenty. This is an extraordinary situation for everyone, but the only solution is to work together. Charging such price hikes unilaterally is out of the question”, Dekelver concludes.
Discounters follow
Delhaize is not a solitary case: at Lidl too, empty shelves are found instead of Danone references, RetailDetail have noticed. “In the current market situation, price negotiations are challenging”, spokesperson Isabelle Colbrandt responds. Its rival Aldi also has a problem with Danone’s new price demands, the German discounter’s spokesperson Jason Sevestre told Belgian newspaper De Tijd.
“Just like many food companies, like Delhaize, Danone is confronted with unprecedented market situations – especially the inflation of prices for raw materials and enery. In this context, we are working together with our suppliers and retail partners in order to optimise costs and reduce the impact for consumers as much as possible”, Danone’s spokesperson Nathalie Guillaume responded to a RetailDetail question.
“However, in the end it is the retailers who set the price. As our price negotiations with Delhaize and Lidl are still ongoing, we are unable to continue our operations as usual, leading to an out of stock. We are committed to a constructive dialogue and work closely with these retailers in order to resume deliveries as soon as possible”, Guillaume continues. She points out that several other retailers – including market leader Colruyt – are still selling Danone’s products.
Fierce competition
These conflicts are by no means unique in the sector: in the given circumstances, negotiations between producers and retailers about price levels have been cut-throat all year. Retailers want to claim the image that they defend consumers’ purchasing power, trying to keep prices down. On the other hand, producers say price increases are inevitable as costs for materials and energy are soaring. So far, most multinationals have been able to largely pass on these higher costs.
However, with the important holiday season on the horizon, retailers clearly want to dig in their heels. The fact that even Delhaize – not a chain well known for its lowest prices – is taking such a hard stance is significant. The spiralling inflation is making competition between supermarket chains extremely fierce. Two months ago, Delhaize started a successful campaign called ‘Little Lions’ that visualised a price reduction for 500 private label products. Carrefour, too, has only recently announced a number of actions to “protect the customers’ purchasing power”..
