Ocado says it expects suppliers to mitigate Brexit price rises in “provocative” letter

Industry

Ocado has told its suppliers they should have “mitigating measures” in place to deal with upcoming price increases due to Brexit.

According to The Grocer, Ocado has sent a “provocative” letter to its suppliers which are facing potentially huge cost increases and tariffs on their goods as a no-deal Brexit becomes highly likely.

In a letter to its suppliers seen by The Grocer, Ocado’s buying director Rose Price said: “We will not be discussing any proposed cost price increases at this time, which you claim is a result of the UK leaving the EU.”

“We would expect our suppliers to already have mitigating measures in place or planning to implement them shortly. We would ask you to come back to us following further guidance and with a full justification and mitigation plan for any proposed cost price increases.”

Suppliers have criticised the statement, calling it “misjudged” and alleging it ignores the huge and potentially business destroying cost rises they are facing.

READ MORE: Ocado’s share price tumbles more than 8% despite positive sales figures

One supplier said: “This sort of response to suppliers facing genuine and, in some cases, huge cost increases just adds fuel to the fire.”

In response, an Ocado spokesperson said: “In the event of any cost increases associated with Brexit we would of course discuss how they are shared with any affected suppliers. We recognise the mitigation actions our suppliers are having to make in preparation and will work closely with them for all scenarios in the coming weeks.”

It comes as Prime Minister Boris Johnson said that talks to secure a deal were in a “serious situation” adding that a no-deal scenario was “very likely”.

The UK is set to leave EU trading rules in two weeks, and both supermarkets and suppliers have been scrambling to prepare however they can for the upcoming changes.

However progress has largely come to a standstill until there was “further clarity” on what deal if any might be reached.

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