Kraft Heinz pulls merchandise from UK retailer Tesco in pricing row

© Reuters. FILE PHOTO: Bottles of Heinz Tomato Ketchup, owned by the Kraft Heinz Company, are seen for sale in Queens, New York, U.S., November 16, 2021. REUTERS/Andrew Kelly

LONDON (Reuters) – U.S. food giant Kraft Heinz (NASDAQ:) has stopped supplying some products to Britain’s biggest supermarket group Tesco (OTC:), which resisted charging higher prices for them at a time of surging inflation.

Tesco, which has an over 27% share of Britain’s grocery market, apologised for the absence of Kraft Heinz products, such as baked beans, from its shelves but said: “We will not pass on unjustifiable price increases to our customers.”

Kraft Heinz said it was battling to provide good value products in a market hit by rising commodity and production costs.

Tesco said its customers had plenty of alternatives to choose from and hoped to have the issue resolved soon.

A spokesperson for Kraft Heinz said it was working closely with Tesco to resolve the situation as quickly as possible.

“We are confident of a positive resolution,” they said.

The spat highlights the tension in the sector over whether manufacturers, retailers or consumers will bear the most pain of soaring cost inflation.

In a similar row in 2016 dubbed “Marmitegate,” Tesco pulled dozens of Unilever (NYSE:) products including the popular yeast spread from its website after a plunge in the British pound, partly sparked by Brexit, exacerbated tensions between suppliers and retailers.

Kraft Heinz said that with commodity and production costs rising, it was seeking ways to provide value for customers “through price, size and packs” without compromising on quality.

Tesco said that with household budgets under increasing pressure, it had a responsibility to ensure customers get the best possible value.

In the UK, wages are struggling to keep pace with inflation that reached an over 40-year high of 9.1% in May and is heading for double digits. Some forecasters expect food inflation to hit 15% this summer and 20% early next year.

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