MPs hit out at ‘baloney’ supermarket claims of price-cut post-merger

Neil Parish MP yesterday told Asda CEO Roger Burnley not to “give us a load of baloney” after Burnley repeatedly claimed his firm’s merger with Sainsbury’s and the product price cuts they have promised would not negatively affect small suppliers.

Burnley said during a Environment, Food and Rural Affairs select committee evidence session yesterday that it would be the 24 major suppliers that make up a third of the company’s turnover which would take the brunt of cuts in purchasing prices, and said Sainsbury’s buying costs were already aligned with Asda. He emphasised that he would ensure smaller suppliers would not suffer.

Parish said that supermarkets were providing him and his committee with “Mickey Mouse numbers” urging “come on, let’s have some sense out of you”.

Asda has 1,700 suppliers that do less than £250,000 of business each year, and Burnley said were “cautiously optimistic” during a meeting.

During the same session Sainsbury’s CEO Mike Coupe said: “I’ve had lots of suppliers talking to me about the benefits they see.”

The CEOs’ comments did not impress MPs, with highlights including Parish demanding to “have a bit of honesty” and adding that small suppliers did not want to appear on the committee for fear of upsetting a major customer. Burnley said: “It’s a very cut throat business out there and I know whose throats you’re going to cut.”

Labour MP Angela Smith asked what effect better terms from big companies such as Weetabix would have on the small companies that supply their ingredients. Smith explained that Weetabix currently sources most of its wheat from farms local to its Northampton factory.

Coupe refused to accept Smith’s claims that small ingredient suppliers could be affected, saying the price of wheat was set by global future markets and not supermarkets or food manufacturers.

Both CEOs dismissed MPs questions over why they could not adopt the same system as Aldi and Lidl with Coupe pointing out that the German supermarkets had 10 times fewer product lines than major supermarkets.

An Asda spokesperson told Catering Today: “We welcomed today’s opportunity to share with the Environment, Food and Rural Affairs Committee why Asda’s proposed merger with Sainsbury’s will benefit customers, suppliers – including our local UK suppliers – and colleagues by creating a stronger, more sustainable business. By joining forces, Asda and Sainsbury’s will be able to do an even better job for their customers – and by getting it right for customers, everybody wins.”

In a statement responding to the evidence session, Asda said: “The numbers cited by Asda CEO Roger Burnley today refer to the market share for all grocery sales in the UK, not just grocery sales in supermarkets.

“We have used the most reputable and respected three industry data sources (Kantar, Nielsen and GlobalData/ Verdict) to deliver an average grocery sales market share for Asda of 12% and Sainsbury’s of 13%, which together constitutes the 25% market share that Roger referenced today. We believe the data we’re using is a more accurate reflection of how customers buy their groceries today.”

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