Survey finds 47% difference in cost of own-brand food items

Analysts forecast price war as supermarkets battle for customers in improving economy

A survey commissioned by Aldi shows the price of own-brand items can vary by up to 47% between different supermarket chains. File photograph: Eric Luke/The Irish Times

A survey commissioned by Aldi shows the price of own-brand items can vary by up to 47% between different supermarket chains. File photograph: Eric Luke/The Irish Times

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A food price war is being forecast as the first major supermarket price survey in a decade shows variations of up to 50 per cent in the cost of own-brand goods.

Competition on price will intensify in the coming months as the big five food chains fight for market share in a booming economy, according to retail analysts Grant Thornton.

The consulting firm has carried out a survey, commissioned by Aldi, that suggests substantial discrepancies exist between the price of a basket of largely similar and commonly bought groceries across the State’s main supermarkets.

To reach its conclusion the firm did a series of price comparison shops on consecutive days in Dublin, Cork, Limerick and Galway across the five main supermarkets. It focused on mid-range own-brand products, which make up more than 50 per cent of Irish consumers’ weekly shopping baskets. Weights were adjusted to make products comparable.

The sample included strawberry jam, fresh cream, honey, ice-cream, rice, orange juice, cheese, yoghurt, soda bread and a wide range of fruit and vegetables including cucumbers, mushrooms, apples and broccoli.

The basket of 62 items was found to cost on average €65.04 in Aldi, €65.53 in Lidl, €76.54 in Tesco, €80.74 in Dunnes Stores and €95.50 in SuperValu.

There have been no grocery pricing surveys done since 2009, when the National Consumer Agency discontinued them after being threatened with legal action by some retailers who felt the price comparisons were invalid.

The results will inevitably be questioned by Aldi’s rivals, but Grant Thornton’s head of retail, Damian Gleeson, said his team had insisted on working independently and that the basket of goods had been “randomly selected from a large pool by our sample generator”.

The products selected were mostly “mid-tier” to make comparisons as clear as possible and the auditors said they had endeavoured to exclude both “value” and “premium” ranges.

The survey placed Aldi on top although the basket of goods cost under 1 per cent less there than in its main rival Lidl. The price differential between the German discounters and the other supermarkets in the State were more substantial with a 17 per cent price gap between Aldi and Tesco and Dunnes Stores said to be 24 per cent dearer and Supervalu as much as 47 per cent dearer.

In the report Mr Gleeson highlighted the competitive nature of the grocery retail sector with “even the most casual observer of business affairs” able to notice “the pages of advertising taken out in our press daily, with spend on TV, radio and social equally noteworthy”.

He suggested that with the economy in strong recovery, competition is only set to increase.

Fundamental questions

In a statement issued on Thursday afternoon SuperValu said it had “some fundamental questions with the survey”. A spokesman said it had requested the data it was based on and asked for the dates the research took place from Grant Thornton and were awaiting a response.

In the absence of a response, he said it was unclear to Supervalu “which products were used in comparisons and whether those comparisons were valid”.

He pointed out that “any grocery retailer can select a basket of goods from their store shelves, which shows that they provide better value than their competitors. A basket of 62 products is not representative of the value on offer in store at SuperValu where we have over 20,000 products on sale, a multiple of what the discounters offer.”

He also said the survey did not reference its voucher offer “where shoppers can avail of up to €16 off a grocery basket of €80 dependent on the level of vouchers they have redeemed through our Real Rewards loyalty programme. As a result some of the media reports being discussed this morning are misleading as they do not give an accurate comparison of prices.”

He also pointed out that “prices vary from week to week due to promotional offers and price cuts” and he added that Supervalu was “particularly disappointed at Grant Thornton on the basis that they quote themselves as doing an independent survey despite the fact that it was commissioned and paid for by Aldi. A comprehensive survey of the Irish grocery market using just 62 products is clearly not representative of the full story.”

He said shoppers “know that SuperValu offers the best combination of value, customer service and quality fresh food in the Irish market” and he highlighted the “level of support that we give to Irish suppliers and communities across the country”.

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