Tesco passes on costs as it hikes the price of biggest selling product
Wednesday 02 July 2008
Tesco has taken the unprecedented step of raising the price of bananas significantly above its big three rivals during a price war.
This week, Tesco raised the price of bananas – the biggest selling unit in UK supermarkets – to 77p a kilo for loose bananas, which is 10p higher than its big three rivals, Sainsbury's, Morrisons and Asda.
The price hike is significant because it signals that if the world's third biggest retailer feels it has to pass on soaring inflationary costs in its supply chain to customers in the form of higher prices, then other grocers are likely to be taking a substantial hit on their margins for bananas.
The move by Tesco is thought to be the first time during the last decade – industry sources said it had not happened since Asda was acquired by Wal-Mart in 1999 – that one of the big four has broken ranks and raised prices. Typically, when one cuts the price of bananas, their rivals match it almost immediately.
In a statement, Tesco said: "We are committed to offering our customers great value and have a number of different offers running each week, including our fruit and veg pledge which promises to cut prices weekly on favourite fruits and vegetables. Unfortunately, due to costs in the supply chain we do have to occasionally raise the prices of some items."
Asda ratcheted up the pressure at the weekend by running a one-off promotion on Friday, Saturday and Sunday of 50p a kilo for bananas, before moving back to 67p on Monday. In May, Asda reignited banana wars by cutting the price of a kilo of bananas from 77p to 72p, which its three rivals matched.
Bryan Roberts, global research director at Planet Retail, said: "Supermarkets sell more bananas than they do anything else. In terms of units, it is the biggest selling product in the country."
However, NGO Banana Link has praised Tesco's recent efforts at establishing a working group to enhance labour conditions faced by workers in the Costa Rican banana industry. Banana Link co-ordinator Alistair Smith said: "Ten years of price wars between British supermarkets has led to deep cuts in wages and conditions for banana and pineapple workers in developing countries but finally Tesco has said enough is enough."
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...