Price dispute between Colruyt and Mondelez illustrates increasing tension in food retail

(Update) Colruyt and Mondelez are embroiled in a price dispute, as a result of which some references of biscuit brand LU are not available on shelves and in the webshop. Supermarkets are putting brand manufacturers under pressure as commodity prices fall again.

“Price increases are not justifiable”

Belgian shoppers will currently not find some popular biscuits from Prince, Pim’s, Petit Beurre or Cent Wafers, among others, on shelves at Colruyt. In the Collect&Go webshop, some Côte d’Or chocolate products – also from manufacturer Mondelez – seem to be affected by the action. A short notice hangs near the empty shelves: “This product is temporarily unavailable. We are in consultation with the supplier to continue to offer you the lowest price. Thank you for your understanding.” With this explicit notice, Colruyt may want to make it clear to its customers that it is making efforts to bring high food prices back down.

In a reaction, the retailers confirms the conflict, stating that Mondelez wants to make “substantial tariff changes” despite an annual agreement. But price increases are not justifiable now that energy and raw material prices are falling again, Colruyt believes: “We would therefore rather find a rate reduction from our suppliers justifiable.”

No Mondelez products are therefore currently being supplied to Colruyt Lowest Prices and Okay stores. The Belgian market leader says it is doing all it can to resolve the situation. “We do, however, maintain our position that we want to protect our customers’ wallets first and foremost and this remains our top priority.”

“Unstable environment”

“Like all food companies, we are still experiencing the effects of persistent inflation. And although certain costs are fortunately falling again somewhat, our overall production costs have increased significantly due to higher prices for energy, transport, packaging materials and certain ingredients. Moreover, unstable conditions within the supply chain are also impacting our costs,” manufacturer Mondelez responded in turn.

“Raising prices is always a last resort, but our costs have increased significantly over an extended period. Therefore, in this volatile climate, we are forced to implement some selective price increases in our categories. Together with Colruyt, we continue to look constructively for solutions so that consumers can find their beloved products on the shelves again.”

Sharpening price image

Empty shelves due to delistings were a while ago in Belgian supermarkets, but all indications are that price discussions are back. For a few weeks now, prices for commodities such as cereals and dairy have been falling, following last year’s massive inflation. Supermarkets are now taking advantage of that momentum to reopen price negotiations with manufacturers.

Since the beginning of this year, Aldi in Belgium said it already cut prices on some 420 products. Lidl last week announced price cuts of 3 to 34% on 250 widely sold private label products such as crisps and mayonnaise. Both discounters want to sharpen their price image with these actions.

So did Carrefour earlier this week: after renegotiating with suppliers, the hypermarket chain is launching a new wave of purchasing power promotions. Since 8 May, the retailer has reduced the prices of 100 products. These are not only private brands, but also some references of well-known brands, such as McCain croquettes or Barilla spaghetti.

“In a context of falling raw material prices, Carrefour has sat down with its suppliers to renegotiate prices downwards,” the press release said. So we may see more empty shelves in the coming weeks.