Suppliers worried about Asda/Sainsbury’s merger

Suppliers to supermarkets Sainsbury’s and Asda have expressed concern that the merger of the two chains could lead to increased pressure on price, according to BBC News.

Mike Coupe, chief executive of Sainsbury’s has said that the merger would enable the resulting company to cut prices on everyday products by around 10%. Suppliers say they are worried they will carry the cost of those price reductions.

Austin Sugarman, head of coffee supplier Fine Foods International, said: “There will be plenty of losers from this. If suppliers are going to have to come up with the savings, then we’ll see consolidation in the supply base.”

Sugarman added: “That means closing factories, that means losing people and it means effectively less choice for consumers.”

Industry bodies have said the merger would make trade challenging for smaller suppliers who are already struggling to cope with increases in the minimum wage and the auto-enrollment of pensions, as well as the devaluing of the pound following the Brexit referendum.

Gordon Polson of the Federation of Bakers said: “We already operate in a very competitive retail environment. We just don’t see possibly how our products could be reduced any further.”

Sainsbury’s said: “At this stage, we are still in the early phases of our plans but we believe this is a great opportunity for suppliers as they will be able to make their supply chains more streamlined, to develop differentiated product ranges and to grow their businesses as we grow ours.

“We are also actively investing in small suppliers – we are recruiting a team which is dedicated to working with smaller and distinctive suppliers to help them bring new products to market and to handhold them through this process.”