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Nestle in Talks to End Supermarket Row as Pricing Pressures Build | US News

The spat is the latest sign of tension between retailers and suppliers.

Manufacturers like Nestle, Unilever and Procter & Gamble are grappling with changing consumer tastes towards healthier food and independent brands. They try to offset that by selling more higher-priced items, but the retailers are reluctant to put up prices as they face their own battle with changing shopping habits and online players like Amazon.com .

Nestle is also under pressure from activist shareholder Daniel Loeb, whose hedge fund Third Point took a $3.5 billion stake last year and has pushed for higher margins, something Nestle has also embraced.

“They need to drive the margin, they’ve been very clear about that,” said Liberum analyst Robert Waldschmidt. “This is a line in the sand and they’re going to stand their ground a bit more on price. These retailers are calling them out on it and testing them.”

“We are convinced that both parties, just as always, will reach an agreement,” it said in a statement, declining to provide further details.

Italian supermarket chain Conad said AgeCore companies had reduced their purchases of Nestle products by around 20 percent, with negotiations underway over prices.

Geneva-based AgeCore could not immediately be reached for comment. According to its LinkedIn page, it represents Edeka in Germany, Eroski in Spain and Intermarche in France, as well as Colruyt, Conad and Swiss Coop. Edeka, Eroski and Intermarche declined to comment.

Disagreements between manufacturers and retailers over price are commonplace and usually get worked out privately, though occasionally products get “delisted” temporarily.

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Nestle in Talks to End Supermarket Row as Pricing Pressures Build | Investing News | US News.

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