18 November 1999
NFU names Safeway in cash-for-promo row
By Isabel Davies
THE NFU is to report the supermarket Safeway to the Competition Commission to complain about an attempt to make its fresh food suppliers pay £20,000 each towards a promotional campaign.
After a series of emergency meetings, the union has decided to ask the commission to make the supermarket giant withdraw its request, which it describes as “totally unacceptable and morally wrong”.
The supermarket is demanding the money from each of its fresh food suppliers, which includes growers as well as packers, to fund the launch of its “1000 Line Availability Focus”.
The scheme aims to guarantee customers that the products they buy the most, such as fresh fruit, vegetables and meat, are always on the shelves.
Last week, the retailer wrote to over 300 suppliers in a letter titled Good News from Safeway and said it would be invoicing suppliers £20,000 per product line.
The money would be their contribution towards the new campaign which would result in a 15% rise in sales, Safeway promised.
The rise in sales would come from improving point-of-sale banners and stocking shelves more regularly, the letter indicated.
But the idea has outraged suppliers, who are incensed by the prospect of being charged per product line, leading to bills in the hundreds of thousands.
They also fear failure to pay will prompt commercial reprisals, despite promises to the contrary.
The supermarket has claimed the scheme will operate on a voluntary basis only and there will be no repercussions for growers who do not take part.
NFU head of food and marketing, Helen Lo, described the demand as “a charge too far”, especially as growers were already incurring extra costs to meet packaging and haulage requirements.
She accepted promotional arrangements of this kind went on with large multinationals, but they could afford it whereas small-scale suppliers and growers could not.
“We would assume that ensuring the shelves of Safeway are kept well stocked would be a fundamental requirement of any store,” she added.
“This is a matter of principle. Why should the grower be charged when there are so many other people involved?”
The NFU fears that if Safeway succeeds it will set a precedent for other retailers.
But despite the criticism, in a statement yesterday (Wednesday), Safeway said it would continue to push ahead.
The initiative was in the interests of both Safeway and suppliers, it claimed.