The not so super-markets

February 4th, 2010 | Uncategorized

Bodegas Castro Martin is in a very fortunate situation, working almost exclusively with the HoReCa (Hotel, Restaurant, Catering) sector of the market, and not dealing with any major supermarket chain in any country. I say fortunate because all too often the practices of the high street ‘big boys’ can be considered just a little unscrupulous, sometimes leaving their suppliers more than a little unhappy.

For example, ‘multibuy’deals (3 for 2, 7 for 6 etc.) will always be funded by the supplier and never the supermarket. The unfortunate part of this arrangement is that these offers are not always negociated with the supplier beforehand, and can come as a very unwelcome surprise. Slightly more doubtful are the ‘listing fees’, when a producer will more or less pay to appear on the shelf, or perhaps even contribute a fixed amount to the opening of each new branch of the chain in question. Even more dubious demands include retrospective discount (outside the negociated contract) when a supermarket chain will simply enforce a lower price to improve their own profit margins.

The most unreasonable requirement however, has to be compensation for theft. When goods that are stolen from stores have to be reimbursed by the supplier…… I truly fail to see how this could be considered to be fair and equitable in any objective business environment.

Of course a supermarket supplier always has the option to walk away at any time, but in a harsh economic climate the opportunities to sell elsewhere can be few and far between, and some very large producers have little option but to comply, no matter how unreasonable the demand.

Perhaps the most unsettling part of this story is that many of the biggest operators annually announce profits running into the hundreds of millions, whilst in stark contrast the poor farmer or manufacturer can be left struggling simply to stay in business.

Today the UK government introduced a new code of practice to help protect farmers and food companies by enforcing supermarkets to keep written records of all negociations with suppliers. The new code will be regulated by an ombudsman who will be appointed to deal with complaints, and act as a go-between, thus protecting suppliers from potential ‘bully-boy’ tactics.

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