Global Mergers: More Power, Less Diversity

The increase in mergers of several multinationals changes the global retail landscape. These large organisations are gaining more and more power. The diversity diminishes and therefore consumers and suppliers are limited in their choices. Multinationals dictate the range, which is becoming increasingly uniform. Is this our future?

The Power Vacuum of Multinationals

Through the acquisition of smaller parties, large supermarket chains are expanding in size and power. It works like a funnel, where at some point, independent, smaller organisations only have one option; to join one of the global market leaders. But the major players are also joining forces, like British supermarket chains Sainsbury’s and ASDA. Even as independent chains, these two were part of the national top five of most powerful supermarket chains. Now that they are operating together, their influence will become even bigger. This new supermarket giant tackles its competition Tesco head-on. The economic background of this merger is understandable, but it means that there are even less players left. And they are gaining even more power.

Revenue as Incentive for Every New Strategy

When large supermarket chains, next to their deals with global players such as Unilever, do buy special products – think of craft beers from a local brewery or fair-trade chocolate with extraordinary flavour combinations – it does not imply that they are changing their tactics. When such products are becoming successful, it often happens that supermarkets are increasing the pressure to lower the purchase price or by developing their own alternative. The original product will get direct competition or will be taken off the shelves entirely.

Less Freedom of Movement for Suppliers

Nowadays, suppliers too are found with their back against the wall. They are expected to deliver particular products for an increasingly low price. This is manageable up to a certain point, but from there, the quality will become less. With the retrenchment of the range chances are that the quality of the products will diminish. Fortunately, there is an opposing force. Producers holding on to their beliefs and not willing to be influenced by the power play of the multinationals, for example. Consumers too are becoming more opinionated and are questioning certain disputable deals or choices. And because they ultimately decide what does or does not end up in their carts, they remain in charge.

Would you like to hear our view on this global trend? We are keen to tell you more. Do not hesitate to get in touch with Wim van den Berg: w.vandenberg@doorpartners.nl or +31 (0)6 5756 4346.

The sales, marketing and quality control of Prominent tomatoes are handled by Door Partners B.V. This sales subsidiary forms part of the Grower Cooperative DOOR U.A.