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Nestle, retailers nearing compromise in price row - source

[ZURICH] Swiss food group Nestle and retailers including German grocer Edeka are approaching a compromise in their months-long price fight but the outcome of talks remains open, a source close to the negotiations said on Tuesday.

Edeka, Germany's largest supermarket group, had written to its stores this month recommending they expand a boycott of some Nestle products, an escalation of a pricing row between the world's biggest packaged food maker and European retailers.

Nestle and Edeka-led AgeCore - the Geneva-based group of six European retailers that also includes Switzerland's Coop - have not yet reached a breakthrough and the discussions could still fail, the source said on condition of anonymity.

"It's not yet home and dry," the source told Reuters.

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"Nothing is agreed until everything is agreed. The talks are ongoing." Earlier, the Frankfurter Allgemeine Zeitung reported that a tentative compromise had been reached and that officials from both sides were hammering out the details of a new contract, citing an anonymous source that the German newspaper said was involved in negotiations.

"Nestle managers were willing to make concessions on key points," the source told FAZ.

The newspaper reported that the supermarket group was demanding, among other things, that Kit Kat maker Nestle contribute more to cooperative marketing campaigns.

Nestle and Edeka declined to comment on any potential deal to end the dispute, which has emerged as the latest outward sign of tension between European retailers and suppliers at a time of changing consumer tastes and new online competition.

Nestle, under the leadership of new Chief Executive Mark Schneider, is reeling from its weakest annual sales growth in at least two decades that has prompted shareholder pressure to boost revenue and profit margins.

It releases first-quarter sales on Thursday.