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."
International Women's Day 2014: The shocking statistics that show why it is still so important
Singapore sting: Sky-high prices are pushing locals to the edge of affordability
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
International Women's Day 2014: Cherie Blair - ‘Today is a chance to see how far we still have to go’
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
White people become less racist just by moving to more diverse areas, study finds
Exclusive: Impact of immigrants on British workers ‘negligible’
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 4 Liam Neeson turned down James Bond role because late wife Natasha Richardson said she wouldn't marry him if he took it
- 5 Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...