Ask a Grocery Supplier Anything
Discussion
As the title says. Twenty years' experience working in commercial roles for grocery manufacturers in brand and own label, managing business with everyone from independent newsagents to the biggest UK supermarkets. May be of no interest at all but I don't think it's been done in the "Ask a..." series yet.
Varies really. I can't be too specific but there is one retailer that tends to be worse than the rest with the leverage of power. They're good at playing the media too so when (for example) a supplier is facing massive cost increases and trying to pass these on they'll refuse the pricing until products go off sale, claiming it's about offering shoppers value and refusing to be bullied by suppliers when they're the ones trying to strongarm the suppliers into absorbing the increased cost.
We all know the rules of the game and try to find mitigation wherever possible e.g. suppliers will ask for extra listings, promotional space, distribution etc. to help them recover cash but eventually that cash comes at an unsustainable margin and the on-cost of commodities, labour, fuel and the like need to be recovered somewhere. It's very hard for challenger brands in the current climate. If I was supplying cola into 500 stores and Coke said "Give us 500 extra distribution points and we'll take 2% off your price increase" I'd be toast.
It also gets my goat when shoppers see offers in supermarkets and think that the retailers are funding them!
EDIT to add: We do try where possible to get retailers to sign up to annual joint business plans so we know roughly what spend we're committing to and how many products we'll have in how many stores. It's a double-edged sword as it gives us some certainty as suppliers but if part of the plan falls over for any reason it's a stick for the retailers to beat us with and claim we owe them cash to compensate.
We all know the rules of the game and try to find mitigation wherever possible e.g. suppliers will ask for extra listings, promotional space, distribution etc. to help them recover cash but eventually that cash comes at an unsustainable margin and the on-cost of commodities, labour, fuel and the like need to be recovered somewhere. It's very hard for challenger brands in the current climate. If I was supplying cola into 500 stores and Coke said "Give us 500 extra distribution points and we'll take 2% off your price increase" I'd be toast.
It also gets my goat when shoppers see offers in supermarkets and think that the retailers are funding them!
EDIT to add: We do try where possible to get retailers to sign up to annual joint business plans so we know roughly what spend we're committing to and how many products we'll have in how many stores. It's a double-edged sword as it gives us some certainty as suppliers but if part of the plan falls over for any reason it's a stick for the retailers to beat us with and claim we owe them cash to compensate.
Edited by Mallard126 on Wednesday 27th July 14:14
Everywhere I've worked or know of that makes both brand and own label uses different recipes for OL & brand.
What you will find in highly commoditised products is that a lot of retailers' own brands are made to the same recipe to save complexity and cost. A mid-tier Sainsbury's product will often be exactly the same as mid-tier Asda, Tesco or Morrisons. Likewise value tier across retailers.
You'll usually see more differences in Finest, The Best, Extra Special and Taste the Difference as retailers have more restrictive specs for that tier.
What you will find in highly commoditised products is that a lot of retailers' own brands are made to the same recipe to save complexity and cost. A mid-tier Sainsbury's product will often be exactly the same as mid-tier Asda, Tesco or Morrisons. Likewise value tier across retailers.
You'll usually see more differences in Finest, The Best, Extra Special and Taste the Difference as retailers have more restrictive specs for that tier.
Countdown said:
Is it true that you have different grades of fruit/veg and that Grade 1 goes to supermarkets and the other stuff goes to corner shops?
I can answer that, having been in the fruit business for more years than I care to remember. The answer's yes - most packers will have a 'market guy' whose job it is to offload the fruit taken off the packing lines for not meeting the retailers' specs. Usually cosmetic issues, so the flavour/sweetness etc most likely would still be the same. Product would be sold to the wholesale markets or fruit processors.Supermarkets have seen an opportunity in this over the last few years & introduced 'wonky' or 'imperfect' lines. It's always worth looking at the price/kg on these as the cheeky buggers often sell them for more than the regular fruit . . .
sherman said:
How many brands have you created exactly the same product for by just changing the label or packaging the product is sold in ?
I once worked with a guy who'd been at Belgiums biggest humbug factory. They produced for a variety of customers and the sole difference between brands was the number or width of the stripes on the humbug.Mallard126 said:
Everywhere I've worked or know of that makes both brand and own label uses different recipes for OL & brand.
What you will find in highly commoditised products is that a lot of retailers' own brands are made to the same recipe to save complexity and cost. A mid-tier Sainsbury's product will often be exactly the same as mid-tier Asda, Tesco or Morrisons. Likewise value tier across retailers.
You'll usually see more differences in Finest, The Best, Extra Special and Taste the Difference as retailers have more restrictive specs for that tier.
Im lower down the chain than you but to add to this answer for the op question, pick up an own brand and a brand and look at the nutritional values. If they are exactly the same then you don't need to dig further, if different read the ingredients.What you will find in highly commoditised products is that a lot of retailers' own brands are made to the same recipe to save complexity and cost. A mid-tier Sainsbury's product will often be exactly the same as mid-tier Asda, Tesco or Morrisons. Likewise value tier across retailers.
You'll usually see more differences in Finest, The Best, Extra Special and Taste the Difference as retailers have more restrictive specs for that tier.
Perfecft example.
Heinz ketchup ingredients start with tomatoes
own brand ingredients start with tomato puree
+1 That's the smiplest way to check retailers' own label ranges against one another too.
For something as simple and commoditised as a Digestive biscuit or a humbug it's likely that there'll be one or two major suppliers making for all retailers and to cut cost and complexity where possible they'll be the same recipe so bulk can be packed into different bags/packs/cases.
For more complex stuff like ready meals and the like there'll be more variance and each retailer will typically have a benchmark to work against e.g. Aldi may say meat percentage has to be in line with Tesco's product.
For something as simple and commoditised as a Digestive biscuit or a humbug it's likely that there'll be one or two major suppliers making for all retailers and to cut cost and complexity where possible they'll be the same recipe so bulk can be packed into different bags/packs/cases.
For more complex stuff like ready meals and the like there'll be more variance and each retailer will typically have a benchmark to work against e.g. Aldi may say meat percentage has to be in line with Tesco's product.
Mallard126 said:
+1 That's the smiplest way to check retailers' own label ranges against one another too.
For something as simple and commoditised as a Digestive biscuit or a humbug it's likely that there'll be one or two major suppliers making for all retailers and to cut cost and complexity where possible they'll be the same recipe so bulk can be packed into different bags/packs/cases.
For more complex stuff like ready meals and the like there'll be more variance and each retailer will typically have a benchmark to work against e.g. Aldi may say meat percentage has to be in line with Tesco's product.
When I contracted for a wholesaler in finance, I would wander around the RDC where I was based and it was an interesting to see that, for example, Jaffa Cakes, made for the wholesaler under their Happy Shopper brand were made by Bahlsen, who make pretty decent biscuits. For something as simple and commoditised as a Digestive biscuit or a humbug it's likely that there'll be one or two major suppliers making for all retailers and to cut cost and complexity where possible they'll be the same recipe so bulk can be packed into different bags/packs/cases.
For more complex stuff like ready meals and the like there'll be more variance and each retailer will typically have a benchmark to work against e.g. Aldi may say meat percentage has to be in line with Tesco's product.
CambsBill said:
Countdown said:
Is it true that you have different grades of fruit/veg and that Grade 1 goes to supermarkets and the other stuff goes to corner shops?
I can answer that, having been in the fruit business for more years than I care to remember. The answer's yes - most packers will have a 'market guy' whose job it is to offload the fruit taken off the packing lines for not meeting the retailers' specs. Usually cosmetic issues, so the flavour/sweetness etc most likely would still be the same. Product would be sold to the wholesale markets or fruit processors.Supermarkets have seen an opportunity in this over the last few years & introduced 'wonky' or 'imperfect' lines. It's always worth looking at the price/kg on these as the cheeky buggers often sell them for more than the regular fruit . . .
is there just the 2 different grades?
Mallard126 said:
I can't be too specific but there is one retailer that tends to be worse than the rest with the leverage of power. They're good at playing the media too so when (for example) a supplier is facing massive cost increases and trying to pass these on they'll refuse the pricing until products go off sale, claiming it's about offering shoppers value and refusing to be bullied by suppliers when they're the ones trying to strongarm the suppliers into absorbing the increased cost.
I wonder who that could be 
The jiffle king said:
Why are the payment terms with supermarkets so long and why don't they pay small suppliers on time?
Are supermarkets profiteering from the inflation issues (Tesco reporting massive increase in profits)
Do supermarkets feel any guilt at copying branding/packaging of suppliers?
Payment terms aren't all that bad these days. Typically end of month following invoice or similar and they do generally pay on time in full. Unless you've put through a price increase in which case they'll often keep ordering with the old price on their orders, take the stock and refuse to pay your full invoice. Imagine if we all did that when prices go up in store. Drop the amount of cash it would've cost last week on the checkout and say "I'm not accepting your price increase but I'm still taking the stock."Are supermarkets profiteering from the inflation issues (Tesco reporting massive increase in profits)
Do supermarkets feel any guilt at copying branding/packaging of suppliers?
Most of them now have schemes to pay small suppliers faster - often within seven days. I haven't got direct experience of that and I have heard some horror stories in the past but GSCoP (Groceries Supply Code of Practice) should prevent them from carrying on like that.
Supermarkets (and indeed all retailers) will look to maintain their percentage margin on all goods sold when prices go up. So in times of inflation the actual cash amounts made in profit will increase as they'll be making the same percentage of a higher number. But in real terms the inflation means that cash isn't worth as much so the higher cash profits should really net off against inflation.
Do they feel guilty? Ha ha ha ha ha ha ha ha etc.
Gassing Station | The Lounge | Top of Page | What's New | My Stuff