Fruit and vegetables feature prominently in a price-cutting blitz announced by Dunnes Stores in the Irish Republic, as it strikes back against the reductions implemented by market leader Tesco, its major domestic competitor.
The big two, who together account for almost half the €9 billion (£7.6bn) Irish grocery sector, are now engaged in a war of words over which offers the bigger saving to the shopper. It is a fight that suppliers, already under pressure with razor-thin margins, are being forced to fund.
In full-page advertisements in the Irish national newspapers, Dunnes lists the before-and-after prices of 32 items and claims that the reductions it has just announced will cut consumer bills from €153.55 to €113.17, a saving of €40.38. The price of a kilo of loose broccoli has been slashed from €4.99 to €2.99, with a 2.5 kilo of Dunnes Rooster potatoes cut from €3.99 to €2.99.
McCains Homefries straight cut, which were €4.25 for 1.5 kilos, are now €2.42, with 1kg of Birds Eye garden peas reduced from €3.99 to €2.25. Similarly, the price of 1kg of St Bernard bananas is now €0.99, down from €1.29, while the cost of 1kg of St Bernard net oranges has been cut from €1.49 to €1.19.
Tesco set off the current price war with cuts averaging 22 per cent in 11 of its stores along the Irish border. They are aimed at discouraging the shopper exodus from the Republic to Northern Ireland, where prices are up to 30 per cent cheaper as a result of a weakened sterling and lower VAT rates.
In its advertisements, Dunnes has been making much of the ‘limited nature’ of the Tesco cuts, while boasting that its reductions will apply to all the company’s 135 stores across Ireland, north and south. It has also been playing the Irish card, reminding consumers that it is family-owned, has been in business for 65 years and that “the difference is we’re Irish”.
Tesco has now extended its price cuts to three more counties, Meath, Mayo and Galway, and claims to be saving shoppers €100 a month on grocery bills. But it has also upset some Irish suppliers by reportedly reducing their shelf space to accommodate products imported directly from the UK.
However, for growers the impact of the price war has been best illustrated by the unseemly spectacle of Tesco advertising new-season potatoes free of charge as an incentive to shoppers to buy a €6 chicken. A spokesman for the Irish food and drink federation said this week: “There are always losers as well as winners in a supermarket price war - and the losers are always the suppliers.”
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