Tuesday 6 December 2016

Grocery chain's 14-year rise not without controversy

Kevin Keane

Published 25/06/2011 | 05:00

TESCO has had a huge influence on the Irish retail sector since it first arrived in Ireland 14 years ago.

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From operating out of a small number of premises it acquired through the purchase of Quinnsworth and Crazy Prices, the British supermarket claims it is now the biggest grocery seller in the country.

Last year alone it claims to have contributed €2.5bn to the Irish economy, and the €655m of Irish food and drink it exported to its stores abroad made it a bigger market for such products than France or Germany.

But while shoppers have flocked to Tesco, its presence has not come without controversy, amid claims the company uses its huge bargaining power to cut producers' profits to wafer-thin margins.

These claims, however, are just that, as most domestic producers are unwilling to speak out against the supermarket giant.

Collette O'Connor of trade magazine 'Shelf Life' said many producers were too scared to publicly criticise Tesco.

"There's no question about it. The retailers hold all the cards at this stage. It's not just Tesco, in some instances they are the most guilty, but that's because they are the biggest and their name crops up more."

Kieran Murphy, the co-owner of Murphy's Ice Cream -- a brand that has chosen to stay outside of Tesco stores -- said one of the problems with signing up with the retailer was that it was just so big.

Investment

"We didn't go in to it because there would be a significant investment to cope with the demand and if anything went wrong and if you are dumped for any reason, whether it's your fault or theirs, it doesn't really matter, you're suddenly left with a huge percentage of your overall business just evaporating."

Mr Murphy said much of the criticism of Tesco was hearsay, with plenty of rumours about the pressure Tesco puts on individual producers to lower prices.

"Tesco is in business to make money for their shareholders, so they'll do what's right for Tesco and the food producers have to do what's right for them."

Gillian Swaine of Bord Bia declined to comment on pricing or Tesco's relationship with producers. However, she said the company had reacted to greater demand from Irish consumers to buy local.

"There's definitely a demand and appetite to see more Irish products on the shelves and consumers realise the effect that buying Irish can have on the economy.

"We are working closely with them (Tesco) to help local suppliers get listed and from there grow to have a national distribution with Tesco," Ms Swaine said.

Irish Independent

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