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Food inflation: tense negotiations between processors and retailers

20/07/2022 - François-Xavier Branthôme
Some Kraft Heinz baked beans and ketchup products unavailable in Tesco stores after pricing dispute; the supermarket group says it will "not pass on unjustifiable price increases" to customers, but the US food manufacturer says it is facing challenges too.

Britain's biggest supermarket group Tesco says some Kraft Heinz products are not available in its stores due to a dispute over pricing. 
 The US food manufacturer has paused supply and some of its items are already out of stock, according to the Grocer magazine, which first reported the issue. Baked beans, ketchup, and tomato soup are among the products understood to be affected.

The dispute highlights the question of who should bear the biggest cost in the current economic climate - manufacturers, retailers, or consumers.
Food manufacturers, like many businesses, are facing rising costs for fuel and commodities. But their bid to recoup those by increasing their prices puts them in conflict with supermarkets such as Tesco, which have vowed to try to keep prices low for consumers.

Consumers are feeling the pain too - UK inflation reached a more than 40-year high of 9.1% in May and is forecast to hit double digits. That comes alongside soaring prices for fuel and other increases such as council tax.

Tesco said in a statement on Wednesday: "We will not pass on unjustifiable price increases to our customers”. "We're sorry that this means some products aren't available right now, but we have plenty of alternatives to choose from and we hope to have this issue resolved soon," it added.

Kraft Heinz said in a statement: "We are working closely with Tesco to resolve the situation over pricing as quickly as possible”. "We are confident of a positive resolution." The firm added that due to the challenging economic environment - with commodity and production costs rising - it was looking at ways to provide value for customers "through price, size and packs" without compromising on quality.

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