Tesco is demanding its suppliers cut their prices to reflect falling costs of commodities or else face their products being removed from shelves.
The supermarket giant has sent emails to small suppliers listing an analysis of raw material costs and concluding with a demand for a price reduction, according to The Sunday Times.
Those suppliers that have refused to drop their prices have received a reply from Tesco that it would review whether it would continue stocking their products.
One supplier revealed Tesco had asked for cuts of up to 10% and claims it has not received similar demands from the other supermarkets it works with.
A Tesco spokesperson said: “We work with over 3,000 suppliers across the UK and hold regular discussions with them on how to provide the best products and great value for customers.”
The revelations come just days after industry watchdog the Groceries Code Adjudicator launched an investigation into Tesco’s supplier relationships.
Adjudicator Christine Tacon said she had a “reasonable suspicion” that the code had been breached by Tesco.
A Tesco spokesperson responded: “We have worked closely with the office of the adjudicator since its creation to put in place strong compliance processes.
“Following our announcement last September regarding commercial income, we have worked with her to identify any relevant GSCOP (Grocery Suppliers Code of Practice) issues.”
New Tesco boss Dave Lewis, who was previously at FMCG firm Unilever, has promised to overhaul Tesco’s relationships with its supply base through a “sustainable reset” of the retailer’s business model.