Wholesalers are calling on Mars to increase the price marks of key confectionery lines or to maintain the shared margin they enjoy with retailers.
The Grocer understands that Mars this week agreed to a U-turn on plans to reduce the margin shared by wholesalers and retailers on some but not all key confectionery lines. The planned margin reductions were originally scheduled as part of a cost price increase from the confectionery giant to come in this week. However, in a trade communication seen by The Grocer, Mars wrote “having listened to feedback we have decided to continue to maintain the existing shared margin on the below packs post CPI”. The packs in question were three-packs of Mars bars, Snickers and Twix in a £1 price marked pack (PMP) and single packs of Skittles and Starburst in 49p PMPs.
Several leading wholesalers who spoke to The Grocer said the move did not go far enough as it did not include the key £1 sharing bags of its sugar confectionery, with wholesalers and retailers facing a reduction in shared margin of three percentage points. They also singled out Mars over this issue and praised rivals Nestlé and Mondelez, which have recently agreed to offer higher and improved shared margins whilst increasing the price marks in response to rising costs.
Wholesale sources said Mars was insisting on maintaining its current price marks as it believes that consumers won’t buy at the higher prices and said the stance was forcing retailers to strongly consider removing those price marked lines, even though they are there as indicators to shoppers that a store is providing good value. They suggested this was a particularly difficult decision to make given the current cost of living crisis.
“We advocate and support price marked packs and understand that due to cost pressures there will be increases,” said one wholesaler.
“However, a supplier like Mars seems to think that they can increase the cost of price marked packs into wholesale and maintain their consumer market price at the expense of wholesale and retail margin. This is completely wrong and shouldn’t be allowed to happen.”
“The majority of our retailers and consumers prefer the PMPs, however the behaviour of certain suppliers is jeopardising the feasibility of these packs at a time when they should be at the forefront of all concerned to drive consumer confidence and value across the convenience channel during the rise of cost of living.”
Unitas Wholesale MD John Kinney said: “Many suppliers across impulse and grocery have had to make the decision to move their PMPs up with some also taking the opportunity to increase shared margins but not all are following this path, and
I would ask those suppliers who are proposing to reduce shared margin to think again, this action cannot be accepted by Unitas and its members as it is seriously damaging the livelihood of independent retailers.”
A Mars spokeswoman said: “At Mars we have been absorbing the rising costs of raw materials and operations for some time, but the growing pressures we are facing mean that more needs to be done. Increasing the cost of some of our PMPs is not a decision we take lightly , and we have been working with our customers to find solutions to navigating these rises in costs. We have put a number of options in place to best support and provide choice for our partners as we do this.”
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