Brand manufacturers and own label suppliers contacted by The Grocer expressed deep concerns about the power of Sainsbury and Wal-Mart/Asda should either succeed in a bid.
Both major global players and small local producers had the same reservations.
“Morrisons is the one we would like to do the deal in order to level the playing field,” said one international packaged goods company.
“Four good size players are preferable to three much larger retailers asserting more influence.
“This would result in competitive disadvantages for the food manufacturer.”
Morrisons has identified cost savings of at least £250m a year, of which £75m will come from better buying terms.
In comparison Sainsbury believes it can deliver over £300m in synergies, with £125m coming from sourcing.
Asda has yet to reveal details of the savings it expects should it go ahead and table a formal bid for Safeway.
This week suppliers were working out models based on all potential outcomes. A key issue is where offloaded stores will be located. “We are especially strong in the north west and crossover here will be an issue for us,” said one major brand owner.”
As one supplier concluded: “What ever happens there will be inevitable pressure on margins and a retendering process.”