Grolsch boycotts Dutch retailer in price battle

By Chris Mercer

- Last updated on GMT

Related tags: Grolsch, Netherlands

Grolsch, the Dutch brewer, has begun boycotting a top supermarket
in the Netherlands after a dispute over beer prices, in a new
demonstration of supplier power.

Grolsch confirmed that it stopped supplying beer to Dutch retailer Albert Heijn on Tuesday after supply contract negotiations for 2006 broke down.

Heijn, owned by Dutch supermarket giant Ahold, said Grolsch had stopped supplies after the retailer refused to pay the brewer more money for its beer.

A spokesperson for Heijn said Grolsch had asked for an extra €1 per crate of 24 beers from the retailer, and had also asked for selling prices to go up by €1.30.

Grolsch spokesperson Coen Thönissen declined to comment on figures and said the brewer had not sought to influence retail pricing.

The boycott, a first in Grolsch's history, is a problem for both companies: Heijn is one of Grolsch's biggest customers in the Netherlands, yet Grolsch is one of Heijn's top 10 suppliers.

Thönissen said Grolsch had "taken into account"​ the financial risks of the boycott. "We would very much like to supply our beer again through these channels, but we cannot without terms and conditions."

The move highlights the mounting pressure on food and drink producers to keep profit margins afloat amid soaring energy and packaging prices.

The situation is particularly harsh on brewers in Western Europe as the region's beer market continues to shrink. And Thönissen said Grolsch lost several million euros in 2005 as a result of fierce price wars between the big Dutch retailers.

The brewer said in September that the price wars were putting heavy pressure on its market share, and predicted its full-year net profit would dip below 2004 levels.

Albert Heijn said Grolsch's demands for higher prices did not fairly represent higher input costs. "We cannot accept price increases if there is not any reason for it.

"There is always a little bit of tension with suppliers. We promised our customers we would keep a close watch on prices and we want to keep that promise."

The firm said suppliers and retailers needed to find a balance on prices paid, and that it hoped and expected the Grolsch situation to be resolved within the next few weeks.

Grolsch said discussions via fax, e-mail and telephone were on-going. The brewer sells 35 per cent of its beer through Dutch supermarkets.

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