Impact of Tesco-Booker deal on P&H revealed

P&H has outlined concerns the Tesco-Booker merger could have a “serious impact” on its operations if Tesco decides to replace P&H with an in-house option.

The Competition and Markets Authority’s notes on a meeting with Palmer and Harvey in September describe the wholesaler as “facing financial issues for several years.”

It reports that P&H is “naturally concerned” that Tesco – its largest customer, might change its supply chain from P&H to Booker. P&H described assurances from Tesco that it did not plan to do this as “comforting” but added that it was planning for “every eventuality.”

If Tesco did leave the wholesaler, the CMA reports that it would have “a serious impact on P&H’s efficiency, pricing and operations.” The wholesaler said the loss of Tesco as a client could lead to a restructuring of P&H, as it would be unable to replace the value Tesco adds to the wholesaler without finding at least several new major clients.

Palmer & Harvey told the CMA that its complete national coverage and small delivery model is unrivalled in the wholesale market, but accepted that a combined Tesco-Booker “would be able to build the capability” to provide a similar service with investment.

Echoing comments previously made to the CMA by wholesalers including Spar, Bestway, Landmark, Today’s Sugro, Confex and Bidfood, P&H also believe the buying power of Tesco will make Booker “very price competitive” on future contracts. With independent retailers described by P&H as “promiscuous” and as shopping around for the best deal, it supports the argument that independents affiliated with non-booker symbol groups could be disadvantaged by the merger.

Both Tesco and Booker strongly refute this claim, with Booker CEO Charles Wilson telling Retail Express last week that the merger would: “Continue to help retail, catering and small business customers prosper.”

Palmer & Harvey’s comments to the CMA show that it is optimistic for the future of the business despite uncertainty over its debt repayments. The delivered wholesaler stated that the convenience trends of smaller stores and more fresh produce “should further play to P&H’s strengths of being able to serve small delivery orders.”