(Bloomberg) -- Kraft Heinz Co. has temporarily stopped supplying supermarket chain Tesco Plc with most of its products, including ketchup and baked beans, in a row over price increases as businesses grapple with the worst inflation in four decades.
Britain’s biggest grocer confirmed many of the American food manufacturer’s items are not currently available in store or online but said it “will not pass on unjustifiable price increases to our customers.” The grocer said it had “plenty of alternatives” to choose from -- Tesco sells store-brand ketchup and baked beans -- adding “we hope to have this issue resolved soon.”
The dispute illustrates the challenges facing both food manufactures and supermarkets as they try contain price increases at a time when many British households are under severe strain as energy, fuel and food bills rise. Tesco and rival J Sainsbury Plc have already warned inflation is squeezing their profits.
UK Food Prices Are Soaring and Plunging Millions Into Distress
Earlier this month, Tesco’s Chief Executive Officer Ken Murphy said that consumers were “terrified” of the cost-of-living crisis, and Chairman John Allan previously warned that Britain was edging towards “real food poverty for the first time in a generation”.
Kraft Heinz said it’s working with Tesco to try and resolve the situation as quickly as possible. “We always look at how we can provide value through price, size and packs so consumers can enjoy the products they love and trust at a price point that works within their budgets, without compromising on quality,” a spokesman said in an email.
This isn’t the first time Tesco has tussled with suppliers over cost increases. In 2016, Tesco stopped selling some items made by Unilever Plc online after the manufacturer tried to raise prices. The battle was dubbed “Marmitegate” - a reference to a yeast extract spread made by Unilever.
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