Britain's biggest supermarket is said to have removed 31 of the 53 Heineken brands it was selling at the beginning of the year, the London Evening Standard reported, a move that follows a warning from the brewer earlier this year that prices would rise by an average of 6 pence (7.4 cents) a pint due to the fall in the pound since the Brexit vote in June and "prevailing economic conditions."
The decision to remove expensive products mirrors last year's "Marmitegate" dispute with Unilever plc (UL) - Get Report after the consumer products giant demanded a 10% increase in prices across its range, including Ben & Jerry's ice cream and an iconic vegetable-flavored spread known as Marmite, before privately agreeing on a price increase.
In a sign that Britain's exit from the European Union could ignite similar confrontations, lawmakers in the Netherlands warned Wednesday that the country needs to keep strong ties with the U.K. -- its second-biggest trading partner which accounts for 9% of exports -- after Brexit, according to a report commissioned by its Dutch parliament.
"Any restriction on free trade with Britain would inevitably be at the cost of Dutch exports, prosperity and employment," the report said.
U.K. retailers are also facing domestic price pressures linked to faster inflation, which surged to 2.3% in February from 1.9% in the previous month, according to figures released by the Office for National Statistics on Tuesday, breaching the Bank of England's 2% target. This was the fastest acceleration in nearly four years and well ahead of expectations of 2.1%. February also marked the first time in 31 reporting periods where food experienced inflation.
In its annual report released in January, Tesco said, "While deflation has eased, the price of a typical basket remains nearly 7% cheaper than in September 2014. We will continue to do all that we can to ensure that we offer our customers the best possible prices."
Tesco shares were down 0.71% at 11:00 GMT and changing hands at 187.50 pence each against a fall of 0.8% decline for the FTSE 100 benchmark. Tesco stock has lost 7.18% over the past three months, compared with the 1.53% fall in the FTSE 350 Food & Drug Retailers Index over the same time period.