Another week, another news price hike in this week’s Grocer 33. This time it’s Lurpak – a product so expensive these days that supermarkets stick safety labels on 750g tubs, like meat and alcohol (and cheese too). Our own price comparison was on the 500g jar. No surprise, the price has increased by 39%. But the cost is certainly: £5 in Asda for a 500g jar.
Here is another surprise. It’s “only” £3.75 at Waitrose. At this price you can buy two 500g tubs for £7.50. The same price as those Asda safety-labeled 750g jars – while a 1kg jar costs £10 at Ocado and £9.20 at the Co-op. So rushed! Store! While these Waitrose prices last! If you have the money, that is.
That’s what wholesalers do, as we reported last week. That’s what they’ve always done, most often with cigarettes before tariff hikes, but when food inflation only goes one way, there’s an opportunity here too.
Meanwhile, credit to Lurpak owner Arla. Thanks to his brands and his dairy muscle, he was able to obtain appropriate price increases to support his farmers. The same goes for Mars, except at Tesco, where it’s the latest fmcg behemoth to halt supply, following Heinz last week (and others too, we understand).
Unfortunately, not all vendors can negotiate from a position of strength like this. As we report, the price of eggs is rising, but egg farmers are not getting a fair cut, with just 4p of the average 20p increase in egg prices passed on to farmers, according to UK producers free range eggs. Association. Tesco, for its part, says it is focused on supporting primary pork, dairy and egg producers, whose needs are greatest (and margin lowest), while pushing back giant packaged goods companies. This is an understandable position, but not all retailers take this approach. And even Tesco on pork was least and last (or “a little later and a little less” as it boasts). Anyway, it doesn’t always work. Malcolm Walker’s old truism that “big suppliers bully small retailers and big retailers bully small suppliers” is being reversed as regular skirmishes give way to something more fundamental and atavistic.