X5 halts purchases of Raffaello and Kinder products
Pyaterochka, Perekrestok and Chizhik, the supermarket chains that make up the X5 group, said they had suspended purchases of Raffaello and Kinder products.
The decision was taken "because of an unjustified inflation of wholesale prices", X5's press service said.
"The profitability built into the manufacturer's wholesale prices is several times higher than that of the retailer, while the latter is used to ensure stable access to customers across the country and invest in logistics and infrastructure. We consider this imbalance unjustified and have no intention of subsidising it ourselves or passing it on to consumers," the press service said.
Existing stocks of the two brands would last just over a month, the group said.
Kinder and Raffaello belong to Ferrero Russia, the Russian arm of the Italian confectionery group Ferrero, which also makes Nutella, Ferrero Rocher, Tic Tac and Bueno.
X5 said Ferrero Russia's current payment terms did not match the pace at which its products were being sold, making continued co-operation "impractical" under present conditions.
The retailer said it had repeatedly proposed constructive solutions, but that its partner had shown no willingness to revise the terms. It added that it remained open to dialogue and to resuming co-operation, provided commercial terms were brought to a "fair level" that would allow for a balanced relationship and take consumers' interests into account.
X5 is also discussing potential co-operation with other Russian manufacturers and with suppliers from "friendly" countries in the confectionery segment, the press service said.
A year ago X5 took a similar step, halting purchases of Mars products — including Snickers, Twix, Bounty, Mars, Milky Way, Korkunov, M&Ms, Skittles, Orbit, Eclipse and Wrigley's — for its Pyaterochka and Perekrestok stores. The reason given at the time was the same: that the terms offered did not meet the principles of fair pricing. Deliveries resumed in September, which X5 said was the result of a lengthy and constructive negotiation process. A company representative said terms had been agreed that created a basis for a long-term, mutually beneficial partnership.