Groceries Code Adjudicator Christine Tacon has launched a new probe into supermarkets amid fears they have been exploiting own label suppliers with exorbitant costs for packaging changes.
“The GCA continues to hear from suppliers about the impact on their business of retailers’ packaging and design requirements,” she said, in the GCA’s latest newsletter published yesterday.
“I want to understand more about the different elements of this issue such as the costs of design and photography, how often retailers require changes and the impact of dealing with designated packaging and design providers.“
Tacon announced she would be holding a workshop on 29 September on the issue.
“I am hoping to see a broad spectrum of suppliers there to help inform whether I need to take this issue further. This workshop is specifically for users of packaging or design suppliers designated by the retailers. After this workshop, I will consider if I need to hold discussions with packaging suppliers themselves.”
Ged Futter, a former Asda buying chief turned negotiation trainer, said some own label suppliers were being hit with large charges for packaging changes which could breach the Code’s demand for them to be “reasonable”.
“These bills can vary wildly,” said Futter.
“I’ve had one example of a supplier who was billed simply because the retailer didn’t like the new photographs that were taken and they had to be done again. Another one is facing charges because the whole category is being reviewed and all the packaging is having to be re-printed. Retailers will tell suppliers that they can expect a sales uplift but in my experience that rarely happens.”
Futter said that the big four supermarkets were more likely to charge suppliers for packaging changes.
“They are the ones who are fighting hardest for every bit of share with things like packaging changes and they are also the ones with the most private label suppliers,” he said.
Meanwhile Tacon’s investigation into Tesco’s alleged breaches of the Code, her first official investigation since taking up the role, is expected to report in October.