Kodak/Spectra deal upsets customers

There has been widespread adverse reaction in the Irish photo processing industry following Eastman Kodak's decision last week to appoint Spectra Photo as its principal agent for Kodak consumer products and services in the Republic.

Kodak photo lab owners and stockists have been upset by the announcement made last Friday, which came without any consultation. They argue that the move will give Spectra an unfair advantage over its competitors as the dominant player in the retail photo processing market.

Spectra, which purchased Northern Ireland photo processor Belmont Nashua for $6 million (£4.4 million) last March, already has the major share of the Irish photo processing market, up to 75 per cent according to some sources. It also has a large share of the mail order photo development business in the State, including the An Post photo service.

Under the new arrangement Spectra will take control of a further chunk of the market as it distributes Kodak products to photo labs and retailers. The additional business is valued at between £5 and £6 million annually. Confidential trading information previously held by Kodak Ireland about its customers will be made available to Spectra when it takes on the Kodak distribution licence from October 1st. As the photo processing industry operates in a heavily discounted market, Kodak agents are reluctant to release details of inventory requirements, discount arrangements and purchasing trends to their competitor. According to Mr Donal Lucy, group general manager of Spectra, the company will establish a separate distribution arm to handle the supply of Kodak products, which will operate independently of Spectra's retail outlets. "We will simply be distributing Kodak's products here. Terms and conditions and discounts will still be set by Kodak UK."

Kodak Ireland is a wholly owned subsidiary of Eastman Kodak in New York, and its reporting procedures are clustered with Kodak UK.

According to industry sources, representatives from Kodak UK told concerned Kodak agents yesterday, that either they should buy their products from Spectra or not buy them at all. Any other wholesaler who wishes to offer a Kodak product will have to buy it from Spectra. In a statement issued by Kodak Ireland yesterday, Kodak said: "It is not in Kodak's interest to have put a deal in place which has an adverse impact on its current loyal customer base . . . Any change like this is always unsettling for a time, but when the dust settles, our existing customers will see the brand strength of Kodak, teamed with Spectra, giving them an even higher profile in the market place."