Tesco and Heinz reach agreement in price row

Tesco and Heinz have reached an agreement which will see some of the UK's best known products back on the supermarket chain's shelves in the coming days.

Heinz beans and tomato ketchup were among the products that had disappeared from Tesco's shelves in a pricing row.

Tesco declined to say whether those products would be going up in price due to the new agreement.

The row reflects pressures on firms and suppliers as the cost of living soars.

The dispute between Tesco and Kraft Heinz began at the end of June after the US giant tried to boost the prices it was charging the UK's largest supermarket.

Kraft Heinz said at the time it was becoming more expensive to make its products.

Baked beans, ketchup and tomato soup were among the staples that went missing from shelves in some Tesco stores after Heinz stopped supplying the retailer.

But Tesco said on Friday that it had "reached an agreement that will see the full range of Heinz products return to Tesco shelves and online".

"Lorries full of Heinz products including Heinz Tomato Ketchup and Heinz Beanz will hit the road shortly, and Tesco colleagues will be working hard to ensure shelves are filled again over the coming days," Tesco said in a statement. "It's great to be back together."

Last month, the Daily Telegraph reported that Heinz had wanted to charge 30% more to supply some products.

A Tesco spokesperson declined to say on Friday how a deal had been agreed, and whether it would mean higher prices for customers.

Food manufacturers have reported rising costs in recent months, including for energy and commodities, with some warning that they would need to raise the prices they charge to retailers.

As well as Heinz, Tesco also fell out with Mars in a row over prices. This row - which is as yet unresolved - has led to the US food giant halting supplies of Whiskas pet food to the supermarket chain.

Ged Futter, who used to be an Asda executive and is now a director at consultancy The Retail Mind, said it was very likely that Tesco would have agreed to the price rises that Heinz wanted.

"[Tesco] has to have those products on its shelves," he said, because Heinz products are available from so many other retailers.

He said Tesco was "just encouraging shoppers to shop elsewhere" by not having those products at a time when many customers were being squeezed by prices going up quickly.

Mr Futter added that Mars was potentially in an even stronger bargaining position than Kraft Heinz, partly because the amount of pet food it sells to Tesco is only a very small part of its business.

All food manufacturers are facing extreme price pressures, he said, with "literally everything" becoming more expensive.

"Packaging, cans, plastic for bottles, cardboard, paper for labels - all going up. All ingredients: food, fertiliser, and fuel - all going up."

This year, the price of fertiliser has increased from £150 per tonne to £1,000 per tonne, he said.

It is not just big suppliers who are passing on costs - medium-sized and small firms are too, Mr Futter added.

"If they supply at the previous cost they will go bust."