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Supermarkets should support suppliers if they are affected by recent currency fluctuations, says Tacon

Groceries Code Adjudicator Christine Tacon found herself going head to head with Tesco again today. This time it was over Brexit and its trading implications, rather than alleged dodgy dealings in the negotiation room.

Tacon, it emerged, has been fighting the case for suppliers hit by soaring commodity costs on the back of the weak pound. Today she told The Grocer supermarkets had a “duty to engage” in the conversations, having blanked calls from suppliers for whom recently the shoe was on the other foot.

Minutes of a meeting the Adjudicator had with the supermarkets last month emerged on Friday. This was in the wake of the shockwaves sent through the industry by the Tesco versus Unilever trading dispute, which, for a short time at least, saw a raft of the supplier’s products, including Marmite, Hellmann’s and Ben & Jerry’s, removed from online ‘shelves’.

“The GCA indicated that a concern had been raised with her that retailers had in some cases within the last two years requested cost price reductions where suppliers had benefited from currency fluctuations or weak commodity prices, but would not now discuss ways to support suppliers where the supplier was affected by recent currency fluctuations following the referendum on 23 June 2016,” revealed the minutes.

While not specifically referring to Tesco, the Adjudicator certainly paints a very different picture to that of its boss, Dave Lewis. He told The Grocer earlier this month it was suppliers who would face the consequences for not taking action when currency winds were blowing the other way.

“Let me be candid. Where those suppliers when the exchange rate moved in the other direction a number of years ago put that benefit into price so customers benefited then we will be much more sympathetic about the need to accommodate that change,” Lewis said after Tesco’s first-half results.

It’s intriguing to see Tacon become involved now. But even within retail circles, the view is growing that supermarkets will not be able to resist the case for putting up prices for long.

Last week, none other than BRC chairman Richard Baker said it was only a matter of time before supermarkets’ resistance to calls for higher prices “unwound”.

With the Adjudicator wading in on the suppliers’ side, it looks like those difficult conversations are going to be very hard for retailers to dodge for long.