Tesco faces off with Heinz over pricing row

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30th June 2022

Bite-sized business news from the UK and beyond

Good morning This week Airbnb announced that the party is over. The short-term rental platform is making a global ban on “disruptive parties and events” — put in place during the pandemic to stop the spread of Covid — permanent. But the company said exceptions to the ban may be made for "specialty and traditional hospitality venues" in the future.

Today's stories

Tesco faces off with Heinz over pricing row
Record fine for accounting giant after staff caught cheating

FOOD
Tesco faces off with Heinz over pricing row

What happened?
Shopping for baked beans, ketchup and salad cream at Tesco is set to become harder after the supermarket chain pulled some Heinz products off its shelves and online in a dispute over pricing.

Like households, manufacturers are facing soaring inflation
The price of just about everything need to make food has risen this year, from energy to labour and raw materials. To manage this manufacturers are raising the prices they charge to retailers.

But conscious of squeezed household budgets and 40 year-high inflation at 9%, supermarkets are trying to keep prices low for customers.

With a 27% share of the UK’s grocery market, Tesco has a lot of power when it negotiates with suppliers and says it has plenty of alternatives to Heinz.

Industry research found that the price of Heinz products has jumped in other supermarket chains over recent weeks. For example, a 4x400g pack of Heinz Cream of Tomato Soup has risen 40% from £2.50 to £3.50 in Sainsbury’s, while a 4x200g pack of baked beans Snap Pots is up 20% from £2.50 to £2.99 in Morrisons.

Heinz has also said it’s on the side of consumers
The US food giant said it always looks at how to provide value through “price, size and packs”, without compromising on quality. Both Tesco and Heinz have said they are confident of a positive resolution.

This isn’t the first time Tesco has rowed with a major supplier
Back in 2016 Tesco pulled dozens of Unilever products, including Marmite, from its website after a drop in the value of the pound, partly due to Brexit, raised tensions between suppliers and retailers.

Within a of day of the dispute going public the issue was resolved after the share price of both companies fell.

Other stories to keep you in the loop

Pound heads for biggest six-month drop since 2016
UK will face worse inflation than other major economies, says Bank governor
Morrisons sees fall in sales amid 'very fragile and difficult consumer environment'
Poundland boosts £1 items in battle for shoppers
Moonpig delivers lower earnings as pandemic boost fades
Unilever sells off Ben & Jerry’s in Israel to avoid West Bank row
BNPL firm Zilch bags $50m as boss predicts looming crisis for rivals
Travel disruption looms over as Avanti West Coast workers vote to strike
Get ready to say goodbye to Google Hangouts

ACCOUNTING
Record fine for accounting giant after staff caught cheating

What happened?
This week Ernst & Young, one of the Big4 accounting firms, was fined $100m by US regulators after it emerged that some employees had cheated on the ethics part of their accounting exams. It’s the largest penalty ever imposed on an audit firm.

Some context: The role of audit firms like EY is to hold companies accountable for the integrity of their financial reporting, so practicing ethically is important.
In the US auditors need to pass a series of exams to obtain the licence they need to practice.

However, the regulator found that between 2017 and 2021 a "significant number" of EY audit staff specifically cheated on the ethics component of their exams that were required for their accounting jobs.

To make matters worse: Internal investigations at EY uncovered the cheating, but the firm didn’t disclose them to the authorities for nine months. The cruel irony? Had they studied for the ethics test, they would have known this was bad.

The fine is the largest that the US regulator has ever imposed against an accounting firm, due to EY’s decision to not be fully transparent with investigators. It’s twice the amount imposed on fellow Big4 firm, KPMG, after a similar cheating scandal was uncovered at that company in 2019.

Stat of the day

A recent survey found that up to 4.9 million fewer people are giving to charity in the UK compared to 2019

Interesting links from around the web

The ‘dull but lucrative’ degrees
There are actually 4 types of introverts
The list of edible things that you probably shouldn’t be eating

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Tesco faces off with Heinz over pricing row

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