Suppliers should brace for the King of tough years

By: Chris Brook-Carter - 13 January 2011 11:10

If you remain under any illusions as to how tough the UK retail scene continues to be - and let's face it, it will probably get worse this year - then look no further than an article on our sister site just-food yesterday, quoting Sainsbury's CEO, Justin King.

Suppliers, he said, would have to "work very hard" to justify price increases as commodity costs continue to rise.

Speaking exclusively to just-food, King said that many of the commodity cost increases, particularly on wheat, had been "widely predicted" and that suppliers should have prepared by hedging against them.

It's unusual to hear rhetoric like this in the public domain. We all know that negotiations between suppliers and supermarket buyers are robust, but they largely remain behind closed doors. That King has made these comments in public is perhaps a reflection of the inevitably more heated nature of the debate in coming months.

Over Christmas I had a couple of conversations with well-placed sources who believed we would see a small number of high profile desertions of the UK supermarket sector from within the wine trade this year.

With no sign that margin pressures will go anywhere positive again this year, who can blame them?