A FIERCE price war has erupted in the tranquil world of baked beans, with supermarket groups selling a standard size 425g tin for as little as 7p - a price last seen in 1971, writes Patrick Hosking.
Kwik Save, the third biggest retailer of packaged groceries after Sainsbury and Tesco, has slashed its No Frills own-label beans from 13p to 7p in 150 of its stores. The cuts were in response to continental groups Aldi and Netto, which started pricing their own-brand beans at 9p, and then 8p, in their British stores three weeks ago.
Independent on Sunday tester Jack Wellborn, 21 2 , above, ate a whole tin of the Kwik Save beans: 'They're nice,' he said.
Derek Pretty, Kwik Save's finance director, said the company was determined to be seen as the cheapest on the high street. 'Selling beans at 7p isn't of course what we would naturally choose to do.' Kwik Save has had to limit shoppers to 10 tins because shop owners were buying in bulk to sell on. The beans are low-quality imports from Italy. It is too early to establish whether the cuts are luring shoppers from higher-priced, higher-quality, beans.
Tony MacNeary, a grocery analyst with NatWest Securities, estimated that Kwik Save could be losing 7p to 8p a tin on the promotion. 'It's become a feature of the discount sector to focus on a core 10 or so products and cut the hell out of the price,' he said. Other deeply discounted lines, known in supermarket jargon as KVIs (known value items), have been bread, milk, sugar and disposable nappies.
Kwik Save last week briefed the City on its strategy, which remains to open new shops despite price competition and fears of saturation. It plans to open 80 shops a year for the next three years, boosting the chain to 1,000 shops. Analysts came away nervously. Bill Myers of Nomura Securities downgraded his 1994/95 profits forecast from pounds 137m to pounds 132m. The profits warning from rival Shoprite last week further damaged sentiment about the sector.
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