(June 28) PLEASANTON, Calif. — Although a letter mentioning pricing restrictions that Pleasanton-based retailer Safeway Inc. recently sent to all of its vendors might have given some of the chain’s produce suppliers pause, officials say those vendors need not worry.

The letter, officials said, was not intended for produce suppliers, although all vendors likely received it.

Much of the letter focused on guidelines regarding billing allowances and invoice issues, but it also touched on restrictions on price increases.

The letter, dated June 11 and signed by Richard Dreiling, Safeway’s executive vice president of marketing, manufacturing and distribution, and David Bond, senior vice president of finance and control, informed suppliers that all list cost increases require a 30-day advance notice.

Officials were quick to note that the letter was not targeted at fruit and vegetable vendors.

“Not at all,” said Rick Smith, Safeway’s vice president of corporate produce, said when asked whether such pricing policies could ever be applicable to produce suppliers. “Quite honestly, I didn’t even know it (the letter) was coming out.”

Such letters go out periodically and apply, generally, to Safeway’s nonproduce suppliers, Smith added.

“It was really something they send out once every couple of years,” Smith said. “It’s really applicable to general merchandise and grocery. We know that (produce) prices change on almost an hourly basis. This letter is not signaling any changes relative to any produce vendors.”


But the ambiguity of the message, perhaps, was the potential problem, said Matt McInerney, executive vice president of the Newport Beach, Calif.-based Western Growers Association.

“It’s the first time I’ve ever seen anything remotely similar to this communique,” he said. “To be honest, I haven’t had any members contact me, most probably because of the uniqueness of the produce business, where deals are one-on-one and there are certain parameters built into negotiations that make this hard to fit. It’s difficult, certainly, in the very diverse produce sector, that one size fits all. This is a generic comment.”

Most produce suppliers, McInerney said, likely read the letter and assumed it was not meant for them.

“But it points out that people want to be cautious in all communiques and ask, ‘Does this apply to my business?’ And, if any way it’s contradictory to any agreements, certainly they need to air those differences,” he said.

Bond said it’s standard policy to inform all vendors of the chain’s various policies from time to time.

“The last time we sent a similar letter was about four years ago,” he said. “Nothing is changing in our current practices.”


Tom Stenzel, president of the Alexandria, Va.-based United Fresh Fruit & Vegetable Association, agreed that, from a practical standpoint, such a letter had little bearing on produce suppliers.

“I wouldn’t put too much weight in a form letter from any customer,” Stenzel said. “Clearly, every company will negotiate its own deal’s details. That isn’t a policy across the board that everybody lives with. For produce companies, if you’re a good supplier to Safeway, call your Safeway buyers and work with them on it. That kind of stuff always stays private.”

George Chartier, a spokesman for the Agricultural Marketing Service of the U.S. Department of Agriculture, which oversees the Perishable Agricultural Commodities Act, said the letter had not prompted any complaints.

“PACA has not received any complaints about any new regulations or stipulations that Safeway or any other major retailer may have recently issued to its vendors,” Chartier said. “Normally, that would be the way PACA would get involved in something like that: You’d file a complaint, and then we’d take a look at that specific complaint.”