In the four-weeks to September 15, which covered the period in which banana prices had dropped by 20 per cent on average across the network of multiple retailers in the UK, total sales of loose bananas rose by just 0.1 per cent in volume, according to AGB data. Revenue across the sector in the same period was down by 7.8 per cent.

These figures back up the views expressed in freshinfo by major importers and the Banana Group that bananas are not price-sensitive and that the current price-cutting exercise, which sees the three leading multiples united below the 90p a kilo mark and has led to almost all retailers taking a significant chunk out of their banana price tickets, is futile.

Total banana sales in the same period have actually risen by 4.9 per cent in volume and fallen by 1.3 per cent in value, as pre-packed product continues to forge ahead. Sales have continued to increase through the price war on loose bananas, which adds more fuel to the argument against price-focused promotion.

Sainsbury's top-fruit and banana buyer Marcus Hoggarth said of the price cutting exercise: 'We don't welcome it and I don't believe it is sustainable for retailers or producers. But since it happened, our share year on year for the same four-week period has increased by 0.6 per cent, Tesco's is up by 0.2 and Asda's has fallen by 0.1 per cent. The frequency of purchase across the industry has been the same as it was for the same period last year therefore consumption has not grown at all. This is not a banana issue but a retailer ego issue and part of a wider global retailer approach.' This contrasts with other retailer views on the issue. Tesco banana buyer David Williams told freshinfo: 'Our prices won't change. Year on year volumes have been increasing and there has been a further slight increase in volume since the price went down. We must remain competitive in the marketplace on this key line in order to give true value to our customers.' One City analyst has estimated that if prices were maintained at this level for a year, the industry would lose more than £100 million on a line which consistently pulls in the profits. The same AGB data shows that Tesco has increased sales by 8.2 per cent and Sainsbury's by 15.5 per cent in the period, but Asda has only registered a 1.9 per cent rise. Against a 20 per cent decrease in prices, simple arithmetic shows that this does not add up to economic sense.

Promotions can of course be designed to move volume, but this one is nothing of the sort. It appears to be a concerted keeping-up-with-the-Jones's effort, with only Safeway refusing to go with the flow. Its sales have dropped by 19 per cent in the same four weeks, which gives the first hint of a counter-argument, but no one retailer has made significant ground, or money.

The retailers, therefore, are losing money, and its stands to reason that their suppliers are also losing money.

Sainsbury's has a commitment to sourcing from the Windward Islands and as news of hurricane damage to production came through (see page 5) Hoggarth said: 'We will continue to offer commitment to the Windward Islands, but obviously we need to be competitive which puts pressure on ourselves and on them.' Consumers may be the one section of the chain that gains from this type of activity, but judging by their purchasing habits, the vast majority neither realise what is on offer or care.

The Banana Group was unable to comment.

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