**Netherlands:** Hostile negotiations between major supermarkets like Jumbo and food manufacturers have led to distribution disruptions, with aggressive tactics causing product shortages and damaged supplier relationships, raising concerns about market stability and consumer choice.
Negotiations between major food manufacturers and supermarket chains in the Netherlands have recently taken a turn towards hostility, as revealed by a survey conducted by Tubantia’s editorial team among industry leaders. The results indicate that relations at the negotiation table, especially at Jumbo’s purchasing organisation, are at an unprecedented low. Incidents involving verbal insults, psychological intimidation, and personal attacks have become more frequent, causing significant distress among employees. One high-ranking food manufacturer employee noted, “In the ‘normal world,’ such outbursts of insults would be labelled as crossing boundaries,” highlighting the severe impact such behaviour has had on workplace morale.
The consequences of these tense negotiations are becoming increasingly evident to consumers, who have begun noting empty shelves in supermarkets. Major brands, including Douwe Egberts, Pringles, and Coca-Cola, have faced distribution issues, with approximately 250 product types going temporarily unavailable in Dutch supermarkets last year, according to researcher Marleen Hermans from Radboud University.
Supermarkets have attributed their strained relations to a fundamental mismatch in expectations regarding pricing. Despite rising costs in raw materials, they perceive that suppliers are raising prices excessively. Laurens Sloot, a professor of entrepreneurship in retail at the University of Groningen, remarked, “The supermarket business model is under pressure,” using Jumbo’s modest profit margin of 0.3 percent on a turnover of 10.6 billion euros as a poignant example.
To bolster their negotiating power, Dutch supermarkets have aligned with international purchasing organisations. This strategic move enables them to confront major food producers, such as Unilever and Coca-Cola, armed with collective strength. Jumbo has become a member of European purchasing groups Epic and Everest, joining forces with Saad Edeka in Germany and the Dutch online supermarket Picnic. Albert Heijn has also engaged with the purchasing organisation Eurelec, further consolidating its market position.
Negotiations have shifted away from being cordial events held at company headquarters in Veghel or Zaandam to less familiar settings in Amsterdam or Brussels. Suppliers report experiencing aggressive tactics during dealings with Epic and Everest, which are perceived as notorious for their harsh negotiation styles. Sloot corroborated these sentiments, noting that Everest ranks poorly for “fair negotiation” practices and often enforces simultaneous boycotts across multiple countries, which places considerable financial pressure on suppliers.
The impact of these negotiation tactics is underscored by the introduction of a penalty point system employed by Everest, which escalates punitive measures against suppliers by gradually reducing product acceptance and ultimately leading to exclusion from shelves across multiple markets. One smaller food producer expressed frustration, stating that Everest expected them to accept prices lower than market standards in other countries, despite differences in promotional strategies.
Moreover, the goodwill that once characterised relationships between supermarkets and suppliers appears to have diminished. A director from an affected supplier lamented the loss of collaborative spirit, mentioning that many manufacturers are now hesitant to introduce innovative products to Jumbo. The tension has led to significant operational changes, as evidenced by the sentiment shared by Gianluigi Ferrari, CEO of Everest, who stated, “In the Netherlands, the fight between large, very well-known manufacturers and supermarkets was not tough enough.”
Ferrari defended the aggressive negotiating stance, remarking that such measures are necessary to ensure competitive pricing for consumers. He dismissed allegations of bullying during negotiations as unfounded, arguing that both parties are experienced professionals. However, Professor Sloot indicated that these tough negotiations have adversely affected customer satisfaction, with two-thirds of Jumbo’s customers reporting empty shelves, likely contributing to a loss of business as consumers switch to alternative retailers.
As the dynamics between supermarkets and food manufacturers continue to evolve, the long-term implications of these aggressive negotiation strategies raise concerns about market stability and consumer choice. With increasing pressures from shareholders and the marketplace itself, the ongoing battle between these entities showcases a critical juncture in the Dutch retail food sector.
Source: Noah Wire Services
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