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Thursday, April 21, 2005 

Slotting Fee Disclosures?

I think it's a great idea!
A state legislator is seeking to impose civil penalties on retailers that fail to disclose information on slotting fee arrangements.

State Sen. Liz Figueroa, D-Fremont, recently introduced Senate Bill 582 which would require any retailer charging slotting fees to disclose details of the arrangement up front to product suppliers.

Slotting fees represent a $9 billion revenue stream for supermarkets, costing suppliers between $3,000 to $40,000 in annual charges. Some cannot afford the heft payments, which Figueroa claims restrict choice."(Slotting fees) are prevalent throughout the grocery industry and, in some cases, cause harm to food suppliers and consumers," Figueroa said in an interview with the East Bay Business Times (Pleasanton, Calif.)

Figueroa has the support of some farmers and grocery worker unions, but the California Grocers Association adamantly opposes her bill.

The bill will have a hearing sometime this spring. If the bill clears the Senate and the Assembly, it would next be considered by the state Assembly and eventually Gov. Arnold Schwarzenegger. - gourmet news

The decades-old practice of suppliers paying major grocery chains for shelf space is a less-than-fresh controversy. For years, small businesses have argued that the fees push them off the shelves. Meanwhile, grocers say space is limited, and introducing new products is risky. Slotting fees offset those risks, they say.

Charging slotting fees generates substantial money -- about $9 billion annually for the placement of new products alone, according to the Federal Trade Commission -- and has caught the attention of at least one state legislator. - Monterey Herald

The FTC study found that slotting fees "are all over the map," Schultheiss said. Within just the hot-dog category, one of five product groups the commission studied, the agency found one retailer that charged $5,000 and another that charged more than $20,000.

"It's hard to say whether or not there's a direct correlation between how much is charged and how much it costs," she said, because there are no records to check. The report noted, "Many retailers simply do not maintain ... historical, product-specific electronic data on slotting allowances." - sfgate.com

You might not want to ever walk into a grocery store and ask about slotting fees...the general public isn't supposed to know too much about grocer's payola scenarios.

Hi Jill,
You might be interested to know that Sen. Figueroa's committee voted on the Bill last Monday and the Bill failed to pass.

Opponents of the Bill argued that the disclosing rival companies' use of slotting fees to competing manufacturers would lead to collusion by sellers and higher prices for retailers and consumers.

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