Northern Foods squeezes suppliers

FRESH fears about the effect Tesco's growing dominance is having on the rest of the food industry rose today after it emerged that Northern Foods is pressuring its own suppliers for a 5% price cut.

Northern, maker of Goodfella's pizzas, Dalepak burgers and a host of retailer own-label brands such as the Marks & Spencer Count on Us range, wants the reduction to take effect from the end of May.

In a letter to suppliers, the group said: 'Accepting new orders from Northern Foods on or after 1 June will signify acceptance of these changes, which we expect our suppliers to comply with. For you as a current supplier to Northern Foods we believe that this sourcing review provides a significant opportunity to increase your share of business.'

Northern said the move was in line with new chief executive Pat O'Driscoll's aim to boost profit margins by 1% and only partly blamed pressure from its own customers - 75% of its sales come from M&S, Tesco, Sainsbury's, Morrisons and Asda.

But this is unlikely to allay concerns that the supermarkets price war could push more suppliers to the wall as the big guns seek every price advantage to attract customers.

Farmers, independent shopkeepers and Friends of the Earth queued up to attack Tesco's monster £2bn annual profits yesterday, claiming the group had an unhealthy grip on the market.