Friday 24 February 2017

New grocery rules will hurt Irish suppliers, says SuperValu

Rules on how retailers deal with suppliers were signed just before the election was called, writes Sarah McCabe

Sarah McCabe

Sarah McCabe

SuperValu’s Martin Kelleher. Photo: Daragh Mc Sweeney/Provision
SuperValu’s Martin Kelleher. Photo: Daragh Mc Sweeney/Provision

The head of the country's biggest food retailer has warned that new rules could disincentivise supermarkets from buying Irish products.

SuperValu managing director Martin Kelleher told the Sunday Independent that the new rules put an unreasonable administrative burden on supermarkets when dealing with suppliers.

He was referring to the Grocery Goods Regulations, which were signed into law by Richard Bruton just before the General Election was called. They will take effect at the end of April.

"We think it's an administrative burden that adds cost and, we believe, very little value," said Kelleher.

The rules mean contracts between big retailers and suppliers must all be closely documented and cannot be unilaterally changed. Practices such as demanding payments for shelf space are banned. Records must be kept for several years.

"We are disappointed with certain aspects of it, because we feel that it penalises businesses like Musgrave that are Irish and support Irish businesses," said Kelleher.

"There is a temptation or a possibility that one of the easiest ways to get around those regulations is not to buy from Irish businesses. The rules are that you only have to record and do the administration parts of it when you are dealing with Irish suppliers.

"When you buy from abroad, which obviously multinational companies can do more easily... it incentivises that behaviour. And we don't think that's good."

A spokesperson for Musgrave clarified that the rules cover relationships with all direct suppliers, even if goods are coming from overseas - but might be avoided by multinationals who buy indirectly through offices in other countries.

The rules are particularly burdensome when dealing with very small suppliers, the spokesperson added, and can act as a disincentive to supporting food start-ups.

"We are very clear that Musgrave's relationships with its suppliers and partners are strong, clear and fair. We don't believe there is any benefit from this to people dealing with us," said Kelleher.

Their suppliers are not asked to pay to be stocked on shelves, he added.

Switching to foreign suppliers "would be a last-ditch resort", he said. "We are so focused on supporting Irish and supporting local suppliers. But if our competitors are getting price advantages or administrative advantages by doing so, it puts you in a difficult position, it challenges us."

Sunday Indo Business

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