Lidl GB raises spending commitment to UK food suppliers

By James Davey

LONDON (Reuters) -The British arm of German discount supermarket Lidl on Monday increased its commitment to UK food suppliers, saying it would spend 2 billion pounds ($2.5 billion) more with them by 2025 than it previously projected.

Lidl GB and fellow German-owned discounter Aldi are Britain's fastest growing grocers, benefiting from new store openings and their growing appeal to price-sensitive consumers reeling from a cost-of-living crisis.

Lidl GB had in 2019 committed to spend 15 billion pounds with British suppliers from 2020 to 2025, but now expects to spend 17 billion pounds, reflecting its rapid growth.

It plans to spend 4 billion pounds with British suppliers this year.

Lidl GB, which has a UK grocery market share of 7.2%, said it sources two-thirds of its core products from the country, working with more than 650 suppliers.

The company said almost 500 million pounds worth of exports from its British suppliers in 2022 went to other Lidl markets, including over 50 million pounds of British cheese.

The ties between supermarkets and suppliers are in the spotlight after John Allan, chairman of Britain's biggest grocer Tesco, said some companies may be using inflation as an excuse to raise prices more than necessary - comments that baffled the head of the country's farmers' union and food industry groups.

Lidl GB said it saw suppliers at partners. "The farmers and producers that supply us, some of which have been with us for decades, are paramount to the success of our business," Chief Executive Ryan McDonnell said.

Earlier this month, Lidl GB reported a 24.5% jump in December sales from a year earlier.

Currently trading from 950 stores, it plans 1,100 by 2025.

Lidl is part of the Schwarz retail group, which trades in 31 countries.

($1 = 0.8083 pounds)

(Reporting by James Davey; Editing by Sarah Young and Arun Koyyur)