Back to the wrestling ring for manufacturers and supermarkets?

The war in Ukraine is causing unprecedented price increases for energy and raw materials such as wheat and sunflower oil. This forces manufacturers to reopen price negotiations with retailers.

Untenable situation

Not only bread will become considerably more expensive in the coming weeks and months: Ukraine and Russia are important producers of wheat, but also of sunflower oil – an ingredient found in many food products, such as margarine, biscuits and crisps. As the supply is coming to a standstill, prices explode.

This issue only comes on top of the already sky-high prices for energy and transport, while animal feed and fertilisers are also becoming more expensive. The situation is becoming untenable for many manufacturers, meaning they can not continue to deliver at the previously agreed rates and therefore they want to reopen the price negotiations with the supermarket chains that have just been concluded. After all, no one could foresee the impact of the war.

Empty shelves

However, obviously, supermarkets are currently not interested in additional price increases: not only because of the fierce competition between the chains, but also because household budgets are already under heavy pressure due to rising energy bills.

Rabobank supermarket expert Sebastiaan Schreijen therefore already warns for empty shelves in stores: manufacturers will no longer want to supply certain products if supermarkets do not comply with their price demands. Negotiations were already very difficult last autumn, resulting in quite a few open conflicts. New negotiation requirements will make the talks even more difficult, Schreijen told Dutch newspaper AD.

It is not entirely clear whether the talks will indeed be reopened. “I can neither confirm nor deny that we are renegotiating”, Delhaize spokesman Roel Dekelver told Belgian newspaper Het Nieuwsblad. “We are closely monitoring the situation together with the manufacturers. If necessary, we will consult in a constructive manner”, market leader Colruyt responds.

A more detailed analysis of the global food crisis that is going to hit our supermarkets can be found here.