Supermarkets Edeka and Coop expand Nestle boycott: media

FRANKFURT (Reuters) - Two retailers have expanded their boycott of Nestle NESN.S products, according to media reports, raising pressure on the Swiss group in a pricing stand-off with several European supermarkets.

The Nestle logo is pictured on the company headquarters entrance building in Vevey, Switzerland February 18, 2016. REUTERS/Pierre Albouy/File Photo

Germany’s largest supermarket group Edeka has written to its stores recommending that they drop more Nestle products in an escalation of a pricing row between the world’s biggest packaged food maker and European retailers, a trade journal reported.

Swiss retailer Coop, one of the country’s largest food chains, has also boycotted a further 59 products, including well-known Maggi seasonings, according to Swiss paper Blick.

Nestle has for several months been facing off with AgeCore, a Geneva-based group representing six European retailers, including Edeka and Coop, which is seeking better supply terms.

The spat is the latest sign of tension between retailers and suppliers at a time of changing consumer tastes and new online competition.

Nestle, which in February reported its weakest annual sales growth in at least two decades, is under heavy shareholder pressure to boost sales and profit margins.

German trade journal Lebensmittel Zeitung cited a letter that Edeka had sent its 5,900 supermarkets suggesting that they stop ordering more Nestle products including KitKat chocolate bars, Vittel drinks and Wagner frozen pizza.

The boycott had, so far, affected 163 Nestle products, equal to around 20 percent of the revenue that Edeka generates from Nestle products, the magazine reported late on Thursday.

That figure will rise to 30 percent with the expanded measures, the magazine said, without saying how many products would be affected.

Edeka declined to comment.

A Coop spokesman told website 20 Minuten that the chain’s boycott currently affected over 200 products, but the group later declined to comment on ongoing negotiations to Reuters.

In February, Coop said it had stopped orders of more than 150 Nestle products, including Cailler Perle chocolate, Nescafe Azera coffee and pizza brand Buitoni La Fina, demanding better supply conditions.

A Nestle spokesman referred to comments the company’s Chief Executive Mark Schneider made to a newspaper last week, while declining to provide further information.

Schneider had told Neue Zuercher Zeitung in an interview that Nestle was still negotiating with Agecore to end the spat and hoped to find a sensible solution.

“This aggressive approach, coordinated across Europe, (of withdrawing products from supermarket shelves to enforce price reductions) is new in particular for Switzerland,” Schneider said.

Major consumer goods groups like Nestle, Unilever ULVR.L and Procter & Gamble PG.N are grappling with slower sales as consumers migrate toward healthier food and independent brands.

They try to offset that by selling more higher-priced items, but the retailers are reluctant to put up prices as they face their own battle with changing shopping habits and online players like AMZN.O.

In March last year, Britain's Tesco TSCO.L supermarket chain stopped selling several Heineken HEIN.AS beers, and in October 2016, Unilever ULVR.L and Tesco had a row dubbed "Marmitegate" by the British press after the spread disappeared from some shelves.

Reporting by Riham Alkousaa; Additional reporting by Michael Shields, Oliver Hirt and Brenna Hughes Neghaiwi in Zurich and Tom Kaeckenhoff in Duesseldorf. Editing by John Miller and Adrian Croft