Price wars worse for retailers

18 May, 2007

Supermarkets are selling products, including alcohol, for less than suppliers' price to wholesalers, according to a study by the Association of Convenience Stores.

The ACS investigation, which looked at 317 products, found that 10 per cent of products sold in supermarkets were at prices even wholesalers could not compete with. A further 74 per cent were sold at lower prices in supermarkets than they were in small shops.

The practice is forcing some drinks retailers to buy their stock from the supermarkets rather than wholesalers to remain competitive.

Dave Banks, of Fairview Off-licence in Gillingham, Kent, said he sometimes buys beer, soft drinks and milk from nearby supermarkets to sell at his shop.

He said: "It's cheaper than the wholesalers, especially when they have offers on, but I think it's disgusting the way the supermarkets price their alcohol. They shouldn't be able to sell it so cheap."

But Kultar Chandler, of Jobi's Off-licence in Stoke-on-Trent, thinks if retailers innovate they do not need to be beaten by supermarkets.

He said: "I've started going to Birmingham once a month where I can get better deals on alcohol. I also sell 50cl bottles of beer here while the supermarkets do 40cl. When we have nice weather, people buy their beer from us because it's in chillers. It's about having an edge over the supermarkets."

ACS chief executive James Lowman accused supermarkets of "distorting competition" in the UK market. He said: "Supermarkets obtain preferential buying terms that are generated not from their volume and efficiencies but from the ability to dominate their suppliers.

"This market is not working effectively. If the Competition Commission does not act the situation will continue to worsen, small competitors will struggle to remain competitive and consumers will lose the choice and diversity that is vital to a strong grocery market and to communities throughout the country."

The ACS has submitted its findings to the Competition Commission. Asda, Sainsbury's, Tesco and Morrisons declined to comment on the findings.

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