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Last Updated: Thursday, 5 January 2006, 17:25 GMT
Price row prompts Grolsch boycott
Grolsch bottles on the production line
Beer sales are declining in the Netherlands
Dutch brewer Grolsch is boycotting a leading supermarket in the Netherlands in a row over prices.

Grolsch is no longer supplying Albert Heijn stores, after the two failed to reach agreement on how much the retailer should pay for its beer.

Grolsch said "extreme price competition" among supermarkets was hurting business in its home market.

Albert Heijn, owned by retail giant Ahold, said the price increases sought by the brewer were "unacceptable".

Price war

Talks between the two companies are continuing amid concerns that existing supplies of Grolsch in some stores could run out within days.

If prolonged, the dispute could be highly damaging for both companies.

We are so far apart in these negotiations that we have decided we are not willing to supply this retail company with our beers
Coen Thoenissen, Grolsch

Sales through Dutch supermarkets account for about 35% of Grolsch's worldwide sales and Albert Heijn is one of Grolsch's largest customers.

For its part, Grolsch is one of Albert Heijn's best-selling products.

Grolsch said the row had been brewing for some time, prompting it to stop deliveries on Tuesday.

Beer sales are declining in the Netherlands, making it more expensive for firms such as Grolsch to maintain market share.

In September, it blamed a retail price war for a fall in sales after it was forced to offer greater discounts to supermarkets.

"We are so far apart in these negotiations that we have decided we are not willing to supply this retail company with our beers any longer," Coen Thoenissen, Grolsch's director of corporate communications, told the BBC.

Financial impact

Mr Thonissen said Grolsch was "aware" of the financial damage that the dispute could cause but stressed it was crucial for the company to secure sustainable pricing arrangements.

Albert Heijn said it was happy to stock Grolsch products but not at the prices being demanded by the brewer.

"Albert Heijn sets its consumer sales price itself and has promised its customers to keep prices in check," it said in a statement.

"The firm (Grolsch) has confronted Albert Heijn with very large price increases for the whole Grolsch range."

Grolsch's shares fell nearly 3% after news of the dispute emerged.

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