Bord Bia to conduct Irish industry risk assessment after UK supermarket merger

Suppliers fear prices will be driven down by merger of UK grocers Sainsbury’s and Asda

The Sainsbury’s-Asda merger  would make the merged supermarket giant one of the biggest employers in Northern Ireland. Photograph:  Chris Ratcliffe/Bloomberg

The Sainsbury’s-Asda merger would make the merged supermarket giant one of the biggest employers in Northern Ireland. Photograph: Chris Ratcliffe/Bloomberg

 

Bord Bia plans to conduct a comprehensive risk assessment for the Irish food industry following the announcement of the merger of Sainsbury’s and Asda, which has the potential to create the UK’s biggest supermarket chain.

The £7.3 billion (€8.3 billion) entity will enjoy never-before-seen bargaining power and has already announced it expects to lower prices by about 10 per cent on popular products.

Suppliers fear this will be done at their expense with many potentially forced out of the business.

Bord Bia said its London office had been contacted throughout the day by Irish suppliers affected by the merger.

The agency said it plans to develop a comprehensive risk and opportunity analysis report on behalf of the industry.

“We believe each Irish exporter affected by today’s announcement will require bespoke advice as no two situations will be the same,” she said.

Potential exposure

“To that end, we are offering one-to-one guidance and support to companies, whereby we can discuss their particular situation and potential exposure. Bord Bia will work with each company to mitigate any potential risk and explore all potential opportunities,” she added.

Details of the deal came after the companies – the UK’s number two and three supermarkets – confirmed on Monday that the deal would create a retail giant with a bigger share of the market than Tesco. It would have combined revenues of £51 billion (€58 billion) and boast a network of 2,800 Sainsbury’s, Asda and Argos stores, the latter being owned by Sainsbury’s.

Dublin-headquartered Greencore, the biggest supplier of sandwiches to UK supermarkets, saw its shares fall 1 per cent on foot of the announcement. The company declined to comment on the potential impact of the merger.

Sainsbury’s merger with Asda creates a “powerhouse” in Northern Ireland that will need to reassure its nearly 8,000-strong workforce that they have a key role to play in its future, union and business chiefs have warned.

Uncertainty

The merger between Sainsbury’s, which has 13 stores in the North to Asda’s 17, and Asda would make the merged supermarket giant one of the biggest employers in Northern Ireland.

The Union of Shop, Distributive and Allied Workers (USDAW) said the merger came as a shock to staff in both Asda and Sainsbury’s. Michala Lafferty, area organiser in the North for USDAW, said while both organisations had vowed there would be no store closures or job losses as a result of the merger, it would create a period of uncertainty for workers.

“We know from experience that despite the promises things do change so our priority is to do everything we can to safeguard jobs in Northern Ireland and protect incomes,” she said.“There are questions to be answered about how Sainsbury’s and Asda will fit together and about how they will manage their extensive property estate.”

Both Asda and Sainsbury’s source between £250 million (€285 million) to £300 million (€342 million) from suppliers and producers in the North and South each year.