The supermarkets that ate Britain

pounds 2m profit a day for nation's top grocer

Tesco consolidated its position as Britain's leading supermarket yesterday, announcing profits of almost pounds 2m a day as booming sales of ready meals and fine wines confirmed the return of the feelgood factor to the shopping aisles.

Having knocked Sainsbury's from its perch last year, Tesco tightened its grip on the pounds 100bn we spend each year in supermarkets. The rise and rise of Tesco means it takes one in every pounds 7 spent in British supermarkets, slightly ahead of Sainsbury's and leaving both Safeway and Asda well behind.

Sir Ian MacLaurin, Tesco's chairman, said sales had grown by more than half over the past three years, twice as fast as the other three major chains. The wisdom of the company's move away from its cheap and cheerful "pile-it-high" roots was underlined by the fact that most of Tesco's market share had come from the new breed of discount chains such as Lidl, Aldi and Netto.

Price remained the principal battleground among the big grocers but Sir Ian dismissed claims that Tesco's latest initiative, launched last week and dubbed "Unbeatable Value", heralded another price war. Tesco has promised a double refund if customers can find any line cheaper in another store.

The rise in profits in the six months to August to pounds 321m was achieved despite a savage battle for control of the competitive petrol retailing market, which all the supermarkets are using as a loss leader to attract shoppers and circumvent planning restrictions to attach small convenience stores to petrol stations where they might otherwise be unable to build a stand-alone shop.

Tesco said the battle with the oil companies had cost pounds 25m in the half- year and shares of all the supermarket groups were under pressure in the City yesterday as dealers worried that the cost of promoting sales of both food and petrol was close to outweighing the benefit of higher volumes.

Tesco has consistently outpaced its rivals in recent years in new initiatives to steal market share. Its introduction of a loyalty card almost two years ago was derided as nothing more than "electronic Green Shield stamps" by Sainsbury's, before it too jumped on the bandwagon with its Reward card.

Tesco also beat the opposition to introduce 5,000 customer assistants to help with things like packing. The Clubcard was followed by Clubcard Plus, a debit card which saw Tesco moving into personal financial services.

Despite the planning restrictions, Sir Ian said Tesco would be building nine new superstores this year. The group is also spreading its tentacles further into Europe.