Brand manufacturers are making the supply chain unnecessarily complex and are undermining all the advantages of the European single market, says Ahold Delhaize CEO Frans Muller. He calls for greater transparency and for unified prices in Europe.
“Huge national price differences”
“Consumers should be aware that most branded products from large manufacturers are produced in only three factories. So why do we have different prices in each of the 27 national markets? Why are we not seeing a faster trend towards European prices? After all, if we could simplify things, it would make our lives easier”, Muller says in an interview with German Retail Blog.
According to the CEO, huge price differences for standard branded products undermine all the advantages of a single European market. They also make the supply chains unnecessarily complex. “This is not our fault as a retailer because we are more than open to more price transparency. It is also unfair that suppliers seem to be very happy when large discounters buy centrally, although they are much larger than us.”
Muller wants more efficiency in the supply chain and more price transparency for customers: “It is very difficult for them to understand why someone in France only has to cross one border to the south to find a can of soda that is 25 % cheaper. So please, let us have more price consistency and transparency in Europe.”
“Coopernic is not a purchasing organisation.”
Muller does not feel concerned by the accusation that European purchasing groups such as AMS Sourcing (for private labels) and Coopernic (for premium brands) are seeking conflict with brand manufacturers. “Coopernic offers great opportunities for suppliers through improved European distribution”, he emphasises. “Negotiations at Coopernic are simpler than some people think because they wrongly assume that we negotiate terms of trade. In fact, we do not negotiate prices or supplier benefits. We only negotiate an override or an on-top amount for our entire European distribution relationship.” According to Muller, Coopernic is not a purchasing organisation.
It stresses that the negotiations are currently running smoothly: “We have made more progress with our overall negotiation results than last year and with fewer conflicts.” He finds it unjustified that manufacturers complain about margins: “We make a margin of 4 % above the line, which is very good for a European retailer, but large manufacturers achieve 10 % or more! That is a very big difference.”
