Retailers respond to ‘aggressive’ below-cost selling allegations
SuperValu to donate €100,000 to Focus Ireland this Christmas from its fruit and veg sales, while Aldi stresses it alone is bearing the cost of its ‘Super Six' promotion
Print19 December 2013
Martin Kelleher, managing director, SuperValu said: "As the number one supporter of the Irish food and farming sector, we believe it is a step too far to reduce the price of our Christmas fruit and veg produce any further." However he added that the group’s donation from its fruit and veg sales would make "a huge difference to Focus Ireland and the clients they serve".
Following claims by the Irish Farmers Association (IFA) that Ireland’s major retailers are acting in a "morally reprehensible" fashion by selling fruit and veg at below-cost prices, Aldi and SuperValu have both released press releases to reassure consumers that farmers will not lose out as result of their pricing strategies.
Earlier this week, Minister for Agriculture, Marine and Food, Simon Coveney also waded into the debate by describing the supermarkets’ practices as "aggressive".
"We are seeing at the moment a very aggressive price war where supermarkets are using vegetables as a loss leader to get people into their stores," said Minister Coveney.
He added that new legislation to bind supermarkets to the terms of contracts they’ve signed with food producers, will be published "within weeks, if not days".
However SuperValu has insisted it is firmly against a "race to the bottom on price". The group has just announced that it will donate €100,000 from its fruit and veg sales this Christmas to Focus Ireland and hence will not be reducing the price of its carrots, brussel sprouts and melons any lower than its keenly priced 19 cents.
The Musgrave-owned supermarket group voiced its concern that the race to the bottom on price by some of its competitors is a step too far and will ultimately lead to a reduction in food quality and job losses in the farming sector, especially as 100% of its carrots and brussel sprouts are Irish, which it claims is not the case in its competitors’ stores.
To demonstrate to its customers that it will not benefit financially from maintaining its prices at current levels, SuperValu has decided to give a donation of 14 cents on every bag of carrots, net of brussel sprouts and melons it sells from now to Christmas to Focus Ireland, who work towards ending homelessness. This will result in a donation of approximately €100,000 to this deserving cause.
Aldi pans allegations as ‘unjustified’
Meanwhile Aldi has stressed that it is bearing the cost of its "Super Six" promotion on fruit and veg lines, and not the farmers or growers. In a press statement, the discounter said it "has agreed prices with its suppliers that are fair for all parties. Once an agreement has been reached with a supplier, Aldi honours that agreement. This has been the case since Aldi introduced its weekly "Super Six" promotion on fruit and vegetables in January 2008 and is well understood by farmers and growers. The offer is in line with Aldi’s regular policy of giving great value for money across its core range and exceptional weekly savings on fruit and vegetables through its "Super Six" promotion. The reaction from customers to this Christmas promotion has been extremely positive."
The discounter added its policy is always to source its product range from Irish suppliers where possible. Over 50% of Aldi’s supplier spend is with Irish suppliers, producers and manufacturers. All potatoes on promotion are sourced from the Republic of Ireland. As many of the carrots as possible are also sourced from the Republic of Ireland, however, Aldi claimed that given the exceptional volumes involved and unprecedented consumer demand, additional supplies have been sourced from France. The clementines, honeydew melons, pineapples and Brussels sprouts are sourced from suppliers in a variety of countries.
Aldi added: "The generalised allegations being made in recent days are unfounded and not relevant in the case of Aldi. Aldi is meeting with the IFA later this week to discuss any concerns it may have."
IFA names Dunnes and Lidl in price-war involvement
IFA president John Bryan has also accused the Enterprise Minister Richard Bruton of dithering on the promised regulation. Addressing a protest outside the Department of Jobs, Enterprise and Innovation today, he said robust legislation backed up by an effective and independent Ombudsman must address the below-cost selling of fresh food, whether it be fresh produce, meats for dairy products.
"The decisions of multiples such as Dunnes and Lidl set in train a sequence of events that has undermined the livelihoods of hundreds of vegetable and potato growers and small, family-run fruit and veg shops around the country. It is also very disappointing that other retailers felt the need to match these ludicrous prices."
IFA’s Eddie Downey questioned why the German discounters are not giving away dry, non-perishable goods that they enthusiastically import, and make massive margins on.
He said it would be very naïve to think that retailers were footing the bill for this ‘promotion. "Have no doubt, the same retailers will make back this reduction many times over, either by upping the price on other lines or by demanding a contribution from others in the food supply chain. Either way, they will not take a hit on their profits," he said.
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