Food Suppliers Fear of Being Bullied by Supermarkets

Christine Tacon, the Groceries Code Adjudicator told peers yesterday that the watchdog had found it difficult to get suppliers to come forward with evidence of breaches of code of practices.

Thus, it appears as though the suppliers are all scared of being black listed and facing a potential loss of business if they tell about the current business practices implemented by the supermarkets. This has been further evidenced by the YouGov poll that says that 58% of suppliers feared retribution from the supermarkets.

Does this happen in the wholesale industry too? And if so, what can be done about it?

Typically, there is more competition in the consumer grocery business from the supermarkets than in the wholesale industry. The main reason is that the size of all the wholesalers varies, from very small wholesalers to the largest which is Booker, with £4bn sales. This is predominately cash and carry goods which are all branded products and so part of big manufacturing companies anyway.

Smaller food suppliers who supply the catering distribution companies like 3663, Brakes, Fresh Direct etc are squeezed on prices, but the products get absorbed into restaurant, café food etc and so the prices are not advertised nationally. The end consumer does not get to see the prices of tomatoes, cucumbers etc. and only sees the prices of the sandwiches, baguettes etc. which makes it less transparent. Hence, there is not a big price war on the supplier side.

Thus, we do not anticipate a similar supplier squeeze to the supermarkets in the wholesaler industry and although suppliers will be squeezed to some extent, but not to the extent of that being faced by the supermarkets.