Europe’s biggest own-label supplier, McBride, is believed to be in negotiations to buy a competitor in response to growing pressure from supermarket giants Tesco, Sainsbury’s and Safeway, which it supplies.
It is understood that McBride is negotiating with Toronto-based household goods supplier, CCL Industries, to buy part of its European operation.
In the UK, CCL is a contract manufacturer which supplies aerosol, liquid, and powders for personal care and household products.
City sources confirm talks are taking place and that the company aims to make a move soon. “McBride is being squeezed by retailers on price and is keen to keep its market share as new competitors enter the market.”
“The company has been forced to climb down in negotiations with the big supermarkets and reduce its prices on certain products,” he says.
However, a spokesman for McBride denies the company is in talks with CCL, and claims, “an acquisition is not imminent”.
“We are in discussions with supermarkets about promotion and volumes, some prices go up and some prices go down, but there is no across- the-board decrease in prices,” he says.
The company supplies super-markets with own-label goods, such as Sainsbury’s Novon range, Safeway’s Cyclon and Tesco’s Advance. It has tried to negotiate higher prices with the supermarkets because of sharp rises in raw material costs.
Procter & Gamble started a price war in the detergents market, first with Flash in 1994 and then with Fairy last month is likely to affect McBride’s margins sharply, he says.
Last week Sainsbury’s and Tesco cut the price of washing-up liquids from 69p to 65p to match cuts by P&G’s Fairy and Lever’s Persil.
It has also become apparent that P&G intends to escalate the war by cutting the price of its concentrated liquid laundry detergent brand Ariel Future (MW last week).