Lidl pledges extra £2bn to buy British to ‘support suppliers’
LIDL has pledged to spend an extra £2bn to buy British products after Tesco and Waitrose came under fire over wranglings with suppliers.
Britain’s second fastest-growing supermarket said it would pay out £4bn to UK suppliers this year, meaning it is now on course to spend a total of £17bn between 2020 and 2025. This is £2bn more than initially planned.
The move was touted by Lidl as “cementing its support for suppliers across the country”, amid growing tensions between rival supermarkets and grocery brands and farmers.
Earlier this month, Tesco faced a backlash after John Allan, its chairman, said it was “entirely possible” that food producers were taking advantage of inflation to push up their prices more than necessary. Minette Batters, the National Farmers’ Union president, accused Mr Allan of living in a “parallel universe”, given the scale of the cost increases many farmers and growers had seen.
David Potts, Morrisons chief executive, meanwhile, last week said it was also taking a tougher approach in talks with suppliers. Waitrose has been cutting back how many products it stocks on its shelves, with major brands Mornflake and Warburtons among those to have been affected by the changes.
Lidl has made the pledge to spend more on British suppliers after luring more customers in recent months, as shoppers scramble to find the best deals.
The latest Kantar data showed sales at Lidl were up 24pc year on year in the 12 weeks to Christmas Day, slightly below Aldi’s 27pc growth, but significantly higher than 6pc growth at Tesco, Sainsbury’s and Asda.
Clive Black, an analyst at Shore Capital, said both Aldi and Lidl had been “very switched on” in getting more local suppliers. “They know that, as German discounters, they need to win over certain hearts and minds in the UK.”
However, he said figures seemed to suggest that the discounters were using a loss-leading strategy on some items, ultimately selling some products at a loss to get customers through the door.