North and South: a tale of two grocery bills

Earlier this summer, the Guardian asked families in seven cities, including Dublin, to do a comparable grocery shop and send in their receipts. Dublin, the smallest city to feature, was more expensive than London, Berlin, New York and Paris, and only very slightly cheaper than Sydney. Toronto was the most expensive city, and even there, a basket of goods cost just under 20 per cent more than it did here.

The reason Dublin was included in the mix was not because of its "mega-size" but because it allowed the newspaper to directly compare the prices of identical products in Tesco outlets in two jurisdictions. It found what it described as "some shocking differences".

Eggs in Tesco in Dublin cost 44 per cent more than in London, Irish onions were 51 per cent dearer and broccoli cost 201 per cent more here than there. A packet of Finish dishwasher tablets could be bought for half the price in the UK. Almost across the board, things cost more in the Republic.

The Guardian and its British readers may well have been shocked by the wild price discrepancies, but Irish consumers won't be too surprised. We have grown wearily accustomed to paying much more for our groceries than our counterparts across the water or in Northern Ireland.

Comparing prices: Tesco

Let's compare prices in both jurisdictions by undertaking a "virtual shop" of routine goods on Tesco.ie and Tesco.com, buying 30 items that would be commonly found in most Irish shopping trolleys. We will choose a mix of branded and own-brand options, and, apart from a few minimal differences as a result of imperial versus metric packaging, our baskets are identical. All told, we spend €132.64 in the Republic and €112.02 in the North, a difference of more than 20 per cent.

Some of the price differentials seem inexplicable. A kilogram of loose broccoli sells for €3.15 in the Republic, but just €1.75 in the UK, while a similar volume of carrots are €1.49, and just 94 cent in the UK. Six litres of milk cost just over €5 in the Republic, while close to six litres in the UK – they still use imperial measures there – can be bought for €3.75.

Tesco has repeatedly been asked to explain the price differences, but it always struggles. It usually says overheads are higher in the Republic, but then refuses to reveal its profit margins here, claiming the information is “commercially sensitive”.

We contacted the retailer again to see if it could shed any more light on the issue. It blamed higher labour costs, energy costs and levies on certain products such as wine, and it suggested that the timing of price promotions differs in each market, and said “on some items of fresh produce, meats and other household items, Tesco Ireland is cheaper than the UK”.

Comparing prices: Aldi

Of course, Tesco is not alone in expecting Irish shoppers to pay more. Aldi has performed strongly in the Irish market over the past two years, winning thousands of new customers each month. But there are many examples of Aldi shoppers here paying more than consumers in the UK. Sometimes the differences are staggering.

Among last week’s Special Buys in the Republic were a vacuum cleaner for €129.99, a steam mop for €34.99, a leather reclining chair with a footstool for €179.99 and a storage pouffe for €19.99. A lawnmower would have set you back €89.99, and – had you decided all five items were essential to your life – you would have splashed out a total of€454.95.

All the same items were selling as part of Aldi’s special buys in the UK – the only difference was the price. The pouffe cost £9.99 (€12.49), the leather chair just £99.99 (€125). The steam mop would have set you back €24.99 (€31.25), and the vacuum cleaner – the only one of the five products that was dearer in the UK – cost £109.99 (€137.52). The lawnmower cost €59.99 (€75). All told, a shopper leaving an Aldi with the five items in Britain would have spent a euro equivalent of €381.26 – almost €75 less than an Aldi shopper in Ireland.

We got in touch with Aldi to find out why these items cost so much more in the Republic than across the Irish Sea. Like Tesco, the German discounter defended the price differences by saying the gaps between the Republic and the UK were “not specific to Aldi”. It pointed to “several external factors that will lead to a variation between retail prices, including transportation, VAT and excise, labour, commercial rents and energy charges.”

Other grocery retailers who do business in both jurisdictions stand similarly accused.

The Irish ‘honey pot’

Almost a year ago, the Joint Committee on Agriculture, Food and the Marine published a report on the sector, and recommended that major retailers be prevented from using the Republic as a secret "honey pot" and that they be forced to reveal how much money they make here.

Any chances of that happening, at least in the short-term, were dashed with the publication of the long-awaited Competition and Consumer Protection Bill. While consumers were promised a "watchdog with real teeth" by the Minister for Jobs, Richard Bruton, very little seems to have changed for the grocery sector. Ahead of the Bill being published, there was much talk of a code of practice, either statutory or voluntary. This has been ruled out in favour of a system of regulations, backed by legislation.

The will be no grocery ombudsman, no code of contact forcing retailers to behave, and the Bill contains no mention of the profits being made by multinational retailers. They can continue to fold these profits into global accounts, making it impossible for Irish consumers to get a clear picture of what is going on across the sector.

The overheads issue

Last week the Oireachtas committee chairman, Andrew Doyle, expressed concern about the price differentials that continue to exist between retailers in the UK and here, and he cast doubt on retailers routine claims that higher overheads in the Republic were to blame.

“Some costs are higher in the Republic, for sure,” he says. “But there are other costs which are lower. Groceries come into every home in the country every week, and I would have thought it was possible to develop some mechanism which would allow us to do a proper comparison between the two jurisdictions. It is frustrating, because we wanted something that would highlight the profits being made by grocery retailers in this State but that has not yet happened.”

The chief executive of the Consumer Association of Ireland, Dermott Jewell, is angered by the discrepancies. “Price differences like this are depressing, and it is hard not to get angry when you see that we are still paying way over the odds when compared to our nearest neighbour,” he says. “There are other players in the market, certainly, but as the Aldi prices in Ireland and the UK suggest, not even the German discounters are immune from making us pay more.”

He believes the lack of transparency is the problem. “Players like Tesco have refused to break down or offer up any kind of analysis of their pricing structure here, and the reason they don’t is, I think, because they don’t have any excuses or justifications for charging consumers in the Republic so much more.”

Cross-Border shopping

We have been here before. In 2009, thousands of us routinely crossed the Border to Northern Ireland in search of better value, ignoring politicians who exhorted us to do our civic duty and turn our backs on the bargains.

Given that the average Irish household spends about €10,000 a year on groceries, could anyone living within striking distance of the Border be blamed for making the trip if they could make savings of 20 per cent – or a couple of thousand euro – over the course of 12 months?