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The Grocer Talking Retail

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Sainsbury’s to bring forward milk supply tender to this year

Sainsbury’s is set to reopen its milk supply tender this summer, a year earlier than expected, amid a crisis of profitability in the liquid milk processing sector.

the tendering process for the retailer’s own-label milk supply contract had originally been delayed until 2020 in order to avoid clashing with the expected outcome of the CMA’s inquiry into the Asda/Sainsbury’s merger.

But following a collapse in profit margins across the sector’s largest processors – and lobbying by Müller Milk & Ingredients in particular – it is understood Sainsbury’s is now expected to start the tendering process by July, with the new contracts due to come into force next summer.

Up for renegotiation would be the contract processing rate Sainsbury’s pays its processors, which roughly makes up about 30% of the farmgate price it pays for milk, and covers the processor’s profit margin, manufacturing and delivery costs.


Source: The Grocer Apr 16 | In-store Analysis