Major wholesalers are boycotting price-marked (PMP) treat bags from Mars Wrigley after the supplier was accused of squeezing margins.
A notice posted for retailers in a United Wholesale depot last month, seen by Better Retailing, warned store owners that the confectionery brand had increased the wholesale price on treat bags, but had not adjusted the PMP accordingly.
Although the notice was posted in a United Wholesale depot, senior sources close to the company confirmed that some of Unitas’s other wholesaler members had followed with this approach.
The sources did not confirm the companies, but the membership includes major delivered and cash-and-carry firms Parfetts, AF Blakemore, Filshill, DeeBee, United Wholesale Grocers, Dhamecha and Time Wholesale.
The notice said: “We write to advise you that Mars Wrigley has imposed a price increase on their PMP treat bags, but are not changing the PMP price, which will mean a reduction in retailers’ margins.
“This is clearly unacceptable, and we have rejected their price increase. As a result of this action, there may be a shortage of Mars Wrigley PMP treat bags available to you until the situation is resolved.
“Mars Wrigley straight packs are still available as an alternative or you can stock products from other suppliers who are not reducing your profit margins.
“We apologise for any inconvenience caused and we hope that you support us in this matter as we believe it is unacceptable to expect our retailers to operate on reduced margins. We will update you as soon as the situation is resolved as we continue to negotiate with Mars Wrigley not to reduce retailers’ margins.”
Sources declined to reveal what the margins had shrunk to within Unitas due to commercial sensitivities. However, the margin for £1 Peanut Chocolate M&Ms 82g from Booker was 16.1%.
Mars Wrigley PMP treatbags delisted by Unitas*
- £1 Galaxy Minstrels 80g (19.1%)
- £1 Galaxy Counters 78g (19.1%)
- £1 M&M’s Crispy Milk Chocolate Bites 77g (19.1%)
- £1 M&M’s Mix 80g (19.1%)
- £1 M&M’s Peanut Chocolate 82g (16.1%)
- £1 M&M’s Brownie Bites 70g (19.1%)
- £1 Maltesers Milk Chocolate & Honeycomb Bites 68g (19.1%)
- £1 Maltesers Dark Chocolate 59g (23%)
- £1 Starburst Minis 125g (20.1%)
- £1 Starburst Original 141g (20.1%)
- £1 Starburst Fave Reds 141g (20.1%)
*Margins from Booker
Recent research from analyst TWC revealed that 62% of independent retailers believe their customers would still buy PMPs, even with a slight price increase.
Commenting on its decision, a Mars Wrigley spokesperson said: “At Mars, we have been absorbing the rising costs of raw materials and operations for some time, but the growing pressures we are facing means that more needs to be done.
“Our trade partner relationships are hugely important to us and increasing the cost of some of our products is not a decision we take lightly.
“We are working in partnership with our customers as we make these changes and thank them for their understanding during this process. “We are unable to comment on specific commercial negotiations with individual customers, as they remain confidential.”
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