Retailer X5 stops buying certain Mars products
The Pyaterochka and Perekrestok chains, part of Russia's largest retailer, X5, have stopped buying certain products manufactured by the Russian subsidiary of Mars, a U.S. corporation. This was reported by RBC on 24 July, citing a source close to X5. The shipments, the source said, had actually stopped as of Wednesday 23 July.
X5's press service confirmed this decision. According to X5, the reason is that the conditions offered by the supplier do not conform to the "principles of fair pricing".
The press service specified that the suspension of shipments affected goods in the categories: chocolate bars, candies (sold by weight, in packs, and in sets), dragee candies and chewing gum. Existing stocks will last about two months, after which the retail chain owner plans to replace them with equivalents. "There is no risk of empty shelves, Mars products will run out in August-September and can be replaced with equivalent products from other manufacturers", X5 said.
A spokesman for the retailer said that during the negotiations the parties failed to reach "mutually acceptable agreements" on actual purchase volumes and long-term cooperation. "According to the analyses available to X5, the purchase prices proposed by Mars significantly exceed market benchmarks and do not meet expectations for good faith cooperation between major industry players," he said.
X5 stressed that at a time of high price sensitivity among consumers, it considers an artificial increase in the cost of goods unacceptable, but is interested in mutually beneficial cooperation and an increased share of the Russian manufacturer with optimal prices in each product category. "The company is open to continuing dialogue, but will act strictly in the interests of its customers, ensuring affordability and fairness in the supply chain," the spokesman added.
The press service of Mars' Russian office also confirmed the suspension of confectionery product shipments. However, supplies of pet food (Pedigree, Whiskas, Kitekat, Perfect Fit, Sheba, and Royal Canin brands) continue, a source in the company said.
"We regret this step by our partners, yet at the same time we are grateful to X5 for the long-term fruitful relations that have developed between us. Now we are making every effort to find a mutually beneficial solution. After all, we ultimately have a common goal – to offer consumers a quality product at an affordable price," a representative of Mars in Russia said.
Mars is one of the largest confectionery manufacturers in the world. The American company produces and sells chocolate bars and candies under the brand names Snickers, Twix, Bounty, Mars, Milky Way, Korkunov, M&Ms and Skittles dragees, Orbit, Eclipse, and Wrigley's chewing gum in Russia. Mars did not withdraw from Russia after the military operation began, but has suspended its Russian exports and imports, new investments, advertising and social media activity. Russia's Mars LLC is 62.78% owned by the U.S.-based Wm. Wrigley Jr. Company and 37.22% by Germany's Mars GmbH, the LLC's statements show. In 2022 (latest available data), Mars LLC's revenue totalled RUB 176.5bn and net profit was RUB 27.2bn.