Big C and Dutch Lady duke it out over box milk price

VietNamNet Bridge – Alleging that a Big C ‘buy some, get more free’ promotion violates a marketing agreement, Friesland Campina Vietnam has stopped delivering its ‘Dutch Lady’ milk to the supermarket chain. The ‘gift’ of the retailer On October 7, the first day of of a two week sale featuring ‘never before seen low prices,’ customers crowding into the Big C supermarkets were surprised by a notice at the entrance: “Dutch Lady refuses to provide products to us.” Big C had distributed leaflets promising customers who bought two packages each of four 180 milliliter boxes of Dutch Lady Milk for 16,400 dong would receive a kid-sized 110 milliliter package of milk gratis. Further, they could present their cash register receipt showing purchase of two cartons and later receive yet another kid-sized milk package. One of the free packages was provided by Big C, not Dutch Lady. Duong Quynh Trang, Big C’s external affairs director of Big C, told Tuoi Tre newspaper that the supermarket has prepared for the sale promotion programme for several months, negotiating with suppliers in order to get the best prices. However, a few days before the promotion campaign was launched, Friesland Campina Vietnam (FCV) suddenly refused to provide products for sale, saying that the supermarket’s plan amounted to ‘dumping’ its products. According to Tran Quoc Huan, in charge of marketing for FCV, Big C had agreed with his company not to sell the four-box packages for less than 16,200 dong. FCV agreed also to give one 110 ml box free to those customers who purchase eight cartons of Dutch Lady milk. “Big C’s unilateral decision to give away one additional 110 ml box of milk makes the cost of the Dutch Lady Milk to the customer even less than the price Big C pays us for it. That violates the contract it signed with FCV.” That, Huan emphasized, would cause FCV difficuty with other retailers. Elsewhere, every four box package of Dutch Lady milk is selling at 16,400-16,800 dong. The Big C promotion would induce customers will rush to Big C to purchase milk, to the disadvantage of FCV’s other partners. Friesland Campina Vietnam said it will only resupply Big C when it commits to uphold the negotiated resale price or after the promotion campaign ends. Meanwhile, Big C insists that it has respected the agreement between the two parties. To provide the second 110 ml ‘free box,’ Big C said, it was using its marketing fund to ‘give a gift’ to customers. “We clearly point out that the gift is given by the supermarket. Therefore, it cannot be construed to mean we’re reducing the sale price,” a Big C representative said. On October 9, Dutch Lady milk on the shelves at Big C was seen quoted at 16,800 dong per four cartons, the ‘normal price.’ Who is right? Both sides lose in such a situation, points out a marketing expert. When the supplier refuses to provide products, it will see sales fall. The retailer’s reputation will be hurt when it cannot fulfill an advertising promise. He said that in this case, Big C can’t be accused of breaking its commitment. Technically, at least, it did not try to sell the milk at a price below its promise to the supplier. (The expert conceded that giving gifts is a way of reducing the de facto sale price.) A lawyer consulted by Tuoi Tre agreed that that it is impossible to accuse Big C of dumping products, because the two parties agreed on the sales price and Big C does not violate its commitment on the sales price. According to Vietnamese law, in a sales promotion the price of a good may be reduced to as low as 50 percent of its pre-sale price. No good may be offered ‘on sale’ for more than 90 days each year, and no ‘sale’ may last more than 45 days. VietNamNet/TT