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Albert Heijn tells suppliers to cut prices to help fund its expansion

Tuesday 11 September 2012

Dutch supermarket group Albert Heijn has written to its suppliers telling them it expects a further 2% discount on bulk-buy purchases from later this month to help fund the company’s growth, the Financieele Dagblad reports on Tuesday.

‘As a supplier, you grow with us,’ the letter states. ‘To facilitate this growth, we think it is fitting that you make an appropriate contribution.’

‘This is just too crazy for words,’ one source told the paper. ‘You have no idea how many phone calls I have had from panicked suppliers. Family firms which deliver to Albert Heijn make a profit of between 1% and 2% and will become loss-making.

Powerful position

Legally, Albert Heijn probably has no leg to stand on, Amsterdam University law professor Edgar du Perron, told BNR radio. ‘But you can always have a go and see how the other side reacts. Albert Heijn would appear to have that much power.’

A spokesman for the supermarket group said mid-contract changes are necessary sometimes.

When this year’s discounts were agreed, Albert Heijn had not yet agreed to take over 78 C1000 supermarkets, the paper points out. In addition, it is reorganising its distribution centres and expanding in Germany and Belgium.

Albert Heijn is not the first supermarket group to try to change contracts mid-term. ‘We have recently had similar letters from Jumbo and Sligro,’ Philip den Ouden, director of wholesalers' organisation FNLI is quoted as saying. ‘There must be an end to these attempts to change the rules.’


Should food be cheaper? Have your say using the comment box below.

© DutchNews.nl



 

Readers' Comments

Albert Heijn has far too much power and control over food in the Netherlands, and the goverment should be stepping in to control its growth. €2 for a sprig of mint? Gimmie a break. You get ten times the amount for half the cost in any trip to the market. You could easily shave €30 off a weekly vegetable shopping bill of the same produce from AH. Government needs to stimulate and reward competition before AH has complete control of food supply to consumers in Amsterdam.

By Emma | 11 September 2012 11:10 AM

Ah wants to expand its business and its suppliers should contribute by charging less? Or even worse by accepting to be underpaid?
In a world where common sense rules, suppliers will simply sell to someone else.

Am I the only one who does not want cheap food or cheap anything but simply good-value products? I am so sorry for the suppliers, I wish I could shop directly at their premises.

By joanna | 11 September 2012 12:15 PM

Albert Heijn is one of the lousiest supermarket chains I have ever seen. Low quality and overpriced products (especially "fresh" produce), poor selection and unattractive stores. Unfortunately, AH almost has a monopoly-standing in Dutch cities. Best example is Amsterdam. That position allows AH pretty much to do anything it wants - squeeze suppliers, overcharge customers whilst offering mediocre to poor quality. With AH blackmailing suppliers expect to see even lower quality!

By Corey | 11 September 2012 12:25 PM

Should food be cheaper? you ask.

Good old Albert Heijn did not say anything about making food cheaper. They just want to pay less to the farmer so they can pay for their expansion, strengthen their market share and then be in a position to demand even lower prices from the farmer, make more profit then expand more......

By Craig | 11 September 2012 1:43 PM

Since when does a retailer dictate what it will pay to a chain of suppliers? Isn't that called collusion? Are they mad? Who the heck does AH think they are?

By M | 11 September 2012 1:49 PM

Since when does a retailer dictate what it will pay to a chain of suppliers? Isn't that called collusion? Are they mad? Who the heck does AH think they are?

By M | 11 September 2012 1:49 PM


Hi,
Albert Heijn tells suppliers to cut prices to help fund its expansion. May be I could give some advice to Albert Heijn, drop the bonus gag and give direct prices with special offers. I have experienced and obsererved the Albert Heijn where I live is not consistent with the bonus price and what you pay on the till. Very often with bonus articles the normal price is charged on the till as the tills have not been programed with the bonus prices. In English I think this is called fraud.

By Terence Hale | 11 September 2012 2:46 PM

It would be better if other European supermarket chains were allowed to compete in the Dutch market on equal terms.

Perhaps then there would be better choice and quality available to customers, and AH would not be big enough to bully the local suppliers.

By Pieter | 11 September 2012 3:21 PM

Of course foods should be cheaper, but I don't think that Albert Heijn were suggesting they would on-sell the products for less. I read into this article more than AH are growing, need higher profit margins to fund their growth whilst maintaining their bottom line. If it's indeed this, their request takes the wind out my sails.

By A Nonny Mouse | 11 September 2012 3:47 PM

Disgraceful. They should pay more attention to their staff. I find many rude and badly trained.

By Peter Altman | 11 September 2012 4:06 PM

No food should not be cheaper. Farmers and producers are squeezed already; they are often small businesses and we need to support them by paying them for their work - via food prices. What we must avoid is that large aggressive supermarket chains control even more of what we can get, how much we pay for it, and what the producers make. Buy from a small shop and support locals - or you won't have them any longer.

By Carrie Ballard | 11 September 2012 4:28 PM

This is not about having food 2% cheaper. Is about AH having extra money for it expansion. At the end they probably will get 2% reduction from suppliers and 2% price increase for the customers!

By Kire | 11 September 2012 4:37 PM

What AH are actually asking for is upfront investment for their growth plan. The thing is, if their growth plan fails and they fail to turn a good enough profit, will they give the money back to suppliers. Similarly, if they grow more than expected, will they pay their suppliers a bonus? I think not. If they see such potential in their own growth plans, they should put their money where their mouth is and pay for it themselves. They can then re-negotiate contracts based on new and existing sales figures - not based on a projection.

By Sarah | 11 September 2012 4:42 PM

I would suggest suppliers to take a joint position like stop selling to AH for 1 week. Without products AH does not exists!

By Breyner | 11 September 2012 4:53 PM

It is noticable that the quality of AH food has decreased in the last years. No doubt the suppliers are under pressure to cut costs.

I am lucky in having a council allotment (volkstuin) where I can grow a lot of my own food. That leaves me with a little money over to buy slightly better quality food. It certainly tastes better!

BTW why is it legal to inject meat with 10% water??? It baffles me.

By Gemma | 11 September 2012 4:53 PM

Why should food be cheaper? The quality at Albert Heijn is poor enough already and now they want to force prices and quality down even further, while denying a living wage to the people who produce it. The motto should be "better for everyone", not just "bigger, cheaper". And Jumbo too? I despair.

By Laura | 11 September 2012 5:26 PM

Somehow this smells of modern day colonialism. OK AH is paying the suppliers but to openly say they want to pay them less so they can expand (their market share/further profits)? They're certainly making a profit already (the example of fresh herbs is a good one) so why not invest THAT money on expansion and leave the poor farmers alone?

By Michael K | 11 September 2012 5:28 PM

That gives me a great idea! I want to expand my house. I'll immediately call my electric company and cable company to give me a 2% discount to fund my absolutely optional expansion they have absolutely nothing to do with, as my house is growing and so they must "grow" with me.

That's AH in a nutshell.

By Someone | 11 September 2012 5:36 PM

@ Corey, AH has a monopoly? Not where I live! There's AH,Dirk,Hoogvliet,C100,Plus & an independant with biological produce.
@ Pieter, Aldi has been in my neighbourhood for +/- 6 yrs & Lidl opened a store last year.
We also have a market twice a week.

By Donaugh | 11 September 2012 5:43 PM

Such business practices contribute greatly as to why people around the world are getting sicker and fatter. They cannot afford to buy healthy food due to corporate greed.

By Nouveau Health | 11 September 2012 6:36 PM

Major Dutch Supermarket Purchasing Manager: 'We need your fruit, at 2% lower prices!'
Seller: 'Ok, but I'll have to send you the fruit that has a really late 'best before' date, the stuff that is already half mouldy'.
Purchasing Manager: 'No problem, our customers will never notice the difference'.

By osita | 11 September 2012 8:23 PM

AH acts this way because is practically a monopoly in Netherlands. In other countries there are big chaines like Carrefour, El Corte Ingles, Texaco...etc where you have tones of food, brands to choose from, that is there is competition. Here not. Only the AH prescribed products, always same brands and same poor quality tomatos. The Dutch Gobernment should act, but sorry to say this, in Netherlands people dont care too much on food, so no action will be taken.

By Daniel | 11 September 2012 8:54 PM

@gemma

I totally agree. How can a seller inject 10 percent water into meat then sell it by the kg. Imagine potatoes being sold with a couple of rocks or apples with some ball bearings in the bag. I refuse to buy it.

By Craig | 11 September 2012 9:00 PM

AH acts this way because is practically a monopoly in Netherlands. In other countries there are big chaines like Carrefour, El Corte Ingles, Texaco...etc where you have tones of food, brands to choose from, that is there is competition. Here not. Only the AH prescribed products, always same brands and same poor quality tomatos. The Dutch Gobernment should act, but sorry to say this, in Netherlands people dont care too much on food, so no action will be taken.

By Daniel | 11 September 2012 9:06 PM

Buy your food in the market---support the small supplier.

By GAR | 11 September 2012 10:53 PM

@Emma: yes, make deals at the market, invest in a good freezer & buy up in bulk.@Daniel:agree 100%, boring choice for donkey's years, it's a guv cartel, what else?

For the overweight; boycott products that contain HIGH FRUCTOSE CORN SYRUP, IT'S POISON, EUGENICS!

"And you are animal lovers but still purchase meat from factory farms, really?

The kids that work at AH are nothing more than little slaves, pocket money monkeys..and the guv does NOTHING about this major food bully? final word; DISGUSTING!

By The visitor | 12 September 2012 3:41 AM

I go to the Albert in my neighborhood and look at only the special deals, sometimes these are actually a good deal, however very often even the items that are being offered at a 'special price' at the AH are cheaper at the normal price at Dirk or Vomar! The Dutch go to the AH's out of habit and because of the name. But it makes no logical common sense to shop there. Everything is clearly blatantly overpriced.

By Bill | 12 September 2012 6:49 AM

I've long complained to friends about the lack of selection, choice, and quality at Albert Hein. There are other options - LandMarkt for one which has excellent food and selection - and is just a short drive. Support other supermarkets and then AH will have competition.

By Thomas Zdon | 12 September 2012 7:15 AM

It is a terrible shame that such a supermarket like AH (which is low on quality, choice and price) has the monopoly over here. All the small businesses are pushed out and we are left with AH as the main option. I would rather pay a bit more and take longer with my weekly shop by visiting small independant stores with good quality, local produce. AH are only going to grow bigger and continue to get their own way if we still shop there.

By Chudleighful | 12 September 2012 8:40 AM

Perfect example is also the lunch culture where a lousy sandwich with cheese and a salad leaf is already considered as a 'luxurious' lunch. The market is simply satisfied with a low standard. That's why chains such as AH get by by selling poor produce, water injected meat and tasteless and industrialized food products.

By Corey | 12 September 2012 9:52 AM

If people just stopped shopping there they would lose the stronghold they have created. I personally refuse to step foot in AH. I would rather walk or cycle a bit further or pay a bit more. Besides, their produce is terrible!

By Jason | 12 September 2012 1:19 PM

One positive to come out of this (grasping at straws here) is that Albert Heijn may get a wakeup call when it tries to expand to far, too quick into other territories. German supermarkets will quite simply blow AH out of the water and by overreaching and failing, AH may be forced to reconsider it's current strategy. In all likelihood, it will probably lead to higher prices for the consumer, but one can dream...

By A McB | 12 September 2012 2:16 PM

Have you checked Twitter?! There is a firestorm of criticism about AH, and a petition is circulating to shame the company.

By carrieb | 12 September 2012 4:40 PM

Unsurprising behaviour from Albert Heijn, shocking that they've been allowed to get so much leverage in NL. Ahold http://en.wikipedia.org/wiki/Ahold is not in the food business much these days. Banks and fund managers are their shareholders, and projected growth, the golden graph that every share holder wants to see at the AGM, must be achieved whatever the cost. They don't care a jot about food quality clearly, I even wouldn't put it past them to add poison, so they could also sell us the pharaceuticals! In all seriousness though, I would love to see NL's nonchalant attitude towards fresh food get a reboot. You're a great market nation! Don't settle for sub standard food!

By moxo | 12 September 2012 11:45 PM

AHOLD has 84% of the of the shares in the Swedish supermarket chain ICA, and is attempting to acquire the rest. Does the necessary costs of this have anything to do with this, and do the Dutch buyers from and sellars to, AHOLD, know about this?

By Husserl | 13 September 2012 9:35 AM

I live in Australia and I have never seen supermarket giants have so much power. The good thing in the Netherlands is that everyone tells them off and supermarkets are named and shamed. In Australia on the other hand, the big boys definitely commit 'commercial suicide'. Farmers are forced to sell products under their value to get more shelf space and make profit on other produce. I'm talking about Coles and Woolworths, shame on you! A few weeks ago I saw a documentary about a farmer who makes olive oil, the amount of effort that goes in to 1 bottle... is only for $1 profit.

By Musiclover | 18 September 2012 11:45 PM

 
 
 
 
 
 
 
 
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