Irish grocers accused of “hello money” payments

Posted by Daniel Palmer on 12th August 2009

Irish political party Fine Gael (FG) has launched a stinging attack on the supermarket sector, which it has accused of jeopardising Irish jobs.

FG’s spokesperson on agriculture, fisheries and food Michael Creed said that “forced payments” and “hello money” demanded by supermarkets is damaging Irish agribusiness.

“I am seriously concerned that food suppliers in this country are being subjected to unfair demands by the large retailers in this country with industry sources suggesting that an estimated EUR160m (US$225.9m) in ‘hello money’ is being paid each year by suppliers hoping to secure their products on supermarket shelves,” he said.

Creed has published a draft bill, which seeks to outlaw certain practices in the grocery sector and force supermarkets to publish all relevant accounting documentation.

If fully enforced, the bill would make it an offence for retailers to demand a grant or payment of an allowance from a supplier for advertising or displaying grocery goods, or for providing selling space for grocery goods in a retail outlet.

It would also require retailers and suppliers to maintain a statement of supply detailing the terms and conditions of agreements.

“Government intentions to introduce a voluntary code are utterly pointless and will have very little impact,” Creed said. “We have witnessed the failure of a voluntary code for the grocery sector in the UK where the majority of retailers have failed to comply with a voluntary agreement. This bill is an active response to the crisis facing the sector and will have a real effect on businesses operating in the agri-food industry.”

In response to the bill, Musgrave Group stated that it is “categorically opposed to illegal, unfair and unsustainable business practices” which put the existence of suppliers at risk and damage the reputation of the industry and responsible players within it.

“Musgrave Group does not engage in the practice of ‘hello money’ and would welcome any moves to control and eliminate such “sharp practices” from the Irish grocery sector,” a spokesperson said. “However, a distinction needs to be made between sharp practices and legitimate negotiation which is vital to driving down costs and delivering value to consumers.”

Musgrave said it has written to Fine Gael to outline its position on its approach to working with its suppliers, which is based on developing “long term mutually beneficial relationships” and to point out that it is “fundamentally opposed” to and does not engage in the practice of ‘hello money’.

Earlier today, the Irish government outlined plans to introduce a code of practice to govern relations between suppliers and retailers in the country.

just-food is the world’s leading portal for the global pre-packaged food and retail industries. Its daily mix of breaking news, views, analysis and research serves over 100,000 food executives each month.