The Aldi supermarket chain is once again at the center of controversy for allegedly forcing its suppliers to supply products below their production cost due to its aggressive policy of promotional campaigns and low prices, which would be in breach of the Food Chain Law, according to information from the Seville-based SG Alimentación, one of the various companies affected.
"Apparently, as part of its growth strategy, Aldi has decided to abruptly and unilaterally dispense with some of its usual suppliers, both internationally and nationally, including some Sevillian companies that have complained about some alleged abusive practices," SG Alimentación stated. "The most notorious one is that the continuous promotions of 'sensitive' products at prices below their production cost force companies to pay the difference so that producers are not harmed, given the chain's inflexible stance to try to differentiate itself from the competition," they denounced.
Aldi would even force them to supply the required amount of product when there wasn't enough production to meet needs due to weather or productive reasons, they said. "This means we had to acquire the product outside the usual suppliers, which increases prices and, therefore, affects inter-supplier," they stressed. "It would also be common practice for Aldi to change, at the last minute and with no room for maneuver, the prices agreed and committed to with its inter-suppliers, without any justification. This seriously affects inter-suppliers and the market in general, due to the sensitivity of the products on offer."
"One of the Sevillian companies affected had been supplying Aldi since the beginning of 2002. Aldi unilaterally and unjustifiably terminated their contract with them, just like they did with us after more than ten years of a successful contractual relationship. We are producers and distributors in the fruit and vegetable sector with a national presence and this unilateral and unjustified decision causes serious damage both to us and to the Andalusian business fabric," SG Alimentación stressed.
"Despite repeated warnings that it is unacceptable to supply all the required product at those prices and within those deadlines, given that sometimes promotions are advertised with little margin, Aldi's response has always been the same: to demand compliance with their conditions or that they would look for a new inter-supplier, which means they would lose the business," they stated.
A team of lawyers is working on possible legal action before the courts and competent administrative authorities, similar to other actions the supermarket chain has faced due to its commercial strategy.
"The Andalusian Strawberry Inter-branch organization (Interfresa) and the Union of Small Farmers and Ranchers (UPA) have already initiated legal actions against Aldi for a promotion of strawberries from Huelva that involved selling at a loss, given that 'the production price was much higher than the selling price offered consumers due to the consequences of adverse weather conditions,' according to the association."
"The Valencian Farmers' Association (AVA-Asaja) also filed a complaint with the Food Information and Control Agency (AICA) for an alleged sale at loss or destruction of the food chain in its sale of rice and oranges. Similarly, FACUA-Consumers in Action also asked the National Commission for Markets and Competition (CNMC) to open an investigation into the alleged non-aggression pact maintained by seven large supermarket chains, including Aldi, in their milk and olive oil white brands, in which they apply identical prices in their different varieties," SG Alimentación added.
"The alleged abusive practices of the German chain are not limited to its activity in Spain, as last June the W. Clappison Ltd. Clappison Ltd. company, a producer of Brussels sprouts in the north of England, denounced Aldi in court for terminating their supply without giving them reasonable notice or any reason for not continuing to work with them", they stated.
"This type of action would be part of an Aldi strategy aimed at eliminating inter-suppliers once they have managed, over the years, to create a network of high-level suppliers thanks to the work carried out by the inter-suppliers themselves," SG Alimentación concluded.
For more information:
SG Alimentación SL
C/Mosaivo 18
41703 Dos Hermanas, Sevilla. Spain
Email: [email protected]
www.southgreen.es