Asda faces showdown with suppliers over price cuts

Asda is facing a showdown with suppliers over price cuts as it battles to win back shoppers with bigger deals.

The supermarket will on Tuesday tell representatives from more than 600 food and drink brands that they need to help it to become more competitive.

At its annual supplier conference, Asda bosses are expected to pile pressure on some of its biggest partners, including the tinned-tuna makers John West and Princes, to agree to deeper price cuts.

Allan Leighton, Asda’s chairman, has argued that he wants his supermarket to be at least 5pc cheaper than rivals.

Grocery sources suggested some of the largest brands were still holding back on lowering their prices.

One industry source said certain food makers had previously agreed to Asda price cuts, but experienced a resulting sales boost so were “reluctant to do any more”.

Asda executives are expected to argue this week that it is in suppliers’ interests to agree to lower prices for the Leeds-based grocer, helping to drive shoppers into its stores. It will say this is because it can offer them more space in its big box sites than rivals can.

Bosses will point to how Aldi and Lidl are winning over a growing number of customers despite stocking fewer brands than traditional grocers, largely relying on own-brand products. They are expected to argue that the popularity of the discounters means brands will need to work closer with Asda.

The call for deeper price cuts at Asda comes amid signs that the battle for supermarket shoppers is heating up.

Last week, Tesco chief executive Ken Murphy said he expected growing competition in the run-up to Christmas.

Asda first fired the starting gun on a price war in March, with Mr Leighton saying he had been given a “war chest” to fund price cuts, improve availability of products and refresh tired stores.

Mr Murphy last week said Tesco had been cutting prices “to maintain our momentum” and that the supermarket was “anticipating the second half could be more intensive not less”.

He said: “Some of our competitors went pretty strong on their statement of intent at the start of the year and have acted on that. It doesn’t feel that rational.”

Ged Futter, a retail expert and former buyer, said suppliers would be loath to offer Asda better prices than Tesco, given the difference in size between the two.

He said Asda’s chief commercial officer, Darren Blackhurst, who rejoined the supermarket in July after more than a decade away, would need to do more to win over some of the larger brands.

Mr Futter said: “If all you’re going to do is drop the prices even more when that’s not working, then you need to be a bit more sophisticated than that.”

An Asda spokesman said: “We look forward to hosting our supply partners at our annual conference in Leeds this week. We know that when Asda grows, our suppliers grow too, it’s a shared journey.

“By working collaboratively on price and delivering value for the millions of customers who shop with us every week, we can create momentum together and set ourselves up for a strong 2026.”

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.

Scroll to Top