Supermarkets demand price cuts from suppliers

Supermarkets are demanding price cuts from drinks suppliers to help finance a Christmas discount bonanza in stores across the UK.

Pubs could find themselves squeezed by some of the biggest discount drinks promotions the industry has ever witnessed.

Drinks suppliers claim the country's biggest supermarket chain Tesco is leading the way, asking for price cuts of between 5% and 10%, with companies also being asked to double in-store festive promotion budgets.

Heavy discounting has already begun with beer and lager on offer at Sainsbury's at 44p for a 440ml can, and Asda and Tesco selling cans for 67p each.

One unnamed drinks company told The Sunday Telegraph that Tesco was also demanding a freeze on price rises in 2009.

Federation of Licensed Victuallers Associations chief executive Tony Payne said: "Pubs are going to bear the brunt of excessive discounting by the big stores.

"I fear we are going to see some of the cheapest supermarket drink ever sold in the run-up to Christmas."

Market analyst Nielsen believes supermarkets will be a price battleground throughout November and December, with unsold summer stock also reduced to clear the shelves.

"I think we will see some of the lowest prices on record, not just on beer and lager, but also on spirits," said consultant Graham Page.

Brewers and spirits companies have been traditionally reluctant to discuss the wholesale prices they charge the supermarkets.

But they claim they have no control over retail prices charged by the big companies in their stores.

Drinks giant Diageo has consistently said it does not condone or encourage excessive discounting of its products.