The Lenta retail chain has taken tough action against suppliers who disagree with purchase prices

One of the largest sellers of food and consumer goods, Alexey Mordashov’s Lenta, took tough action with suppliers who disagreed with the proposed purchase prices. The network refused to work with some manufacturers of confectionery, pet food, cosmetics and household chemicals. Experts attribute Lenta’s actions to the growth of the network’s scale after the acquisition of Monetka, but see risks of narrowing the range and reducing traffic.

Lenta is trying to force a change in selling prices for goods from several large suppliers under the threat of stopping purchases, a source in the market told Kommersant. According to him, the list may include Unilever (brands Clean Line, Rexona, Inmarko, etc.), Nestle (Nescafe, Purina, Friskies), Colgate-Palmolive, etc. Lenta, adds Kommersant’s interlocutor ”, may require a discount for a certain period. Another Kommersant source in the industry says that different suppliers are experiencing problems with agreeing prices with the network and there are threats to withdraw products from companies that do not agree with the proposed price.

Lenta reported on April 11 that it had suspended purchases of Mars pet food (Pedigree, Whiskas brands) without agreeing on selling prices. And in March 2024, Lenta announced the refusal of the confectionery manufacturer Mondelez (Oreo, Milka) to supply at the proposed prices. Mars reported that they continue to produce feed in the planned volumes, and prices for these products have not been increased for a year and a half, despite the rise in prices of raw materials and logistics. Mondelez, Unilever and Nestle declined to comment. The Russian office of Colgate-Palmolive did not respond to Kommersant.

Lenta told Kommersant that they decided not to cooperate with companies that offer conditions that do not ensure “consistently low prices on the shelves.” The network, says its representative, refused to work with some suppliers of confectionery and chocolate, animal feed, cosmetics, and household chemicals. The retiring assortment is replenished with similar products from other suppliers, Lenta said.

General Director of Infoline-Analytics Mikhail Burmistrov notes that negotiations between networks and suppliers regarding prices are always difficult and rarely end in suspension of supplies.

“Verny” resorted to this practice, removing some “Red & White” brands from its assortment, he recalls. “Verny” this year reported on the refusal to sell Bacardi alcohol and Abi Product sausages. Verny, Krasnoe & Beloe, X5 Group (Pyaterochka, Perekrestok), Magnit, Auchan and Metro did not provide comments.

Senior analyst at Gazprombank Marat Ibragimov notes that after purchases “Coins” Lenta’s retail space increased by 39%, this year the chain plans to open another 500 convenience stores, so it has apparently changed its approach to suppliers. Now the company wants to tell manufacturers its growth story and is likely to compete for the same terms as market leaders, he points out. Deputy Chairman of the Board of Rusprodsoyuz Dmitry Leonov points out that selling prices depend on the volume of the order, geography of supplies, etc. and cannot be the same for all networks. According to him, with scandals the chains are trying to “push” the supplier on price, but this threatens to narrow the range. A Kommersant source in the market believes that the network thus wants to show regulators that it strives to keep prices low.

The executive director of Rusbrand, Alexey Popovichev, points out that the abandonment of well-known brands of pet food threatens to reduce the traffic of Lenta itself, since in this category there is a high commitment to specific brands. Mikhail Burmistrov believes that the suspension of supplies is unlikely to last long: as a rule, a compromise can be found within a few months.

Anatoly Kostyrev