Price Fuss

Oct 31, 2011 (LBO) - Dairy multinational Fonterra's Sri Lanka unit has stopped supplying dairy products to the Food City supermarket chain after protests from traders they were being undercut by discounts offered by the retailer. Customers said supermarkets operated by the Cargills group had put up notices that Fonterra had withdrawn dairy brands like Anchor owing to a dispute over discounts given by the chain.

Cargills officials were not available for comment but a senior official at Fonterra Brands Lanka confirmed the move, saying it was in response to protests from traders, including those near Cargills supermarkets.

"We supply not only to Cargills supermarkets but to 40,000 outlets," said Fonterra Brands Lanka sales director Dilhan Jayawardena.
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"Cargills is one of them and they are very important and by not having the product we know it's having an impact on customers.

"The issue is Cargills was reducing 25-30 rupees from the retail price. We did not say anything at first but then we were inundated with letters from the retail trade saying they were being undercut and their livelihoods were affected.

"

The 25-30 rupee discounts offered by Food City were particularly hurting retail stores around the sup