Nestle shares fall as it settles pricing row with EU supermarket alliance group

Nestle shares are trading lower Wednesday after the Swiss food firm has reached an agreement in a pricing row with EU retailers.

Nestle shares fall as it settles pricing row with EU supermarket alliance group

Nestle shares are trading lower Wednesday after the food group confirmed it has reached an agreement with EU retail group, Agecore, over a pricing row that has seen Nestle’s products removed from some store shelved across Europe.

By 1335 BST, Nestle shares were 1.04% lower at CHF76.08. The stock had a mixed performance during April, although it ended the month higher than where it began.

Nestle reaches pricing agreement

Nestle has been in a disagreement with AgeCore since February this year. The body, which represents a large number of EU retailers, put pressure on the food group to lower its wholesale prices for the European stores who stock and sell their goods.

When it became clear earlier in the year that Nestle wasn’t willing – at that time - to offer its goods at lower prices to European retailers, a number of prominent stores, who stocked a lot of Nestle products began stocking fewer of those products.

German chain Edeka and Colyrut both took action and removed some Nestle products from its shelves. If all of AgeCore’s members decided to remove products from the Swiss business from its stores, this would represent a loss of some 10% of Nestle’s European business.

However, reports show an agreement has been reached.

“We are pleased that a balanced agreement has been reached and that Nestle products will soon be back on the shelves of the six members of the European retail alliance AgeCore,” Nestle spokesman said, according to Reuters.

Nestle bows down to store pressure

While no details on the agreement are available, it’s clear Nestle has worked to find a pricing level that AgeCore and its members are happy with.

The development comes soon after Nestle reported sales of CHF21.3 billion in the first quarter of 2018, a 1.4% increase from a year earlier. The increase came as sales grew across Europe and in China too.

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