Two days after Tesco slashed the price of its milk, Sainsbury’s and The Co-operative have followed suit.
Sainsbury’s today matched Tesco’s new prices on four and six pints of standard own-label milk, cutting its four-pinters to £1 from £1.39 and its six-pinter from £1.99 to £1.48.
Meanwhile, The Co-op cut the price on one and two pints of milk, from 50p to 45p and 89p to 85p. However, it said it would not follow Tesco’s move to £1 for four pints because this could devalue the price of milk and encourage food waste.
A spokeswoman for Sainsbury’s stressed its retail milk prices were not related to the price it pays its farmers. “We’re matching prices on milk, but the point of difference at Sainsbury’s will always be the values in our supply chain – giving our customers both value for money and the values they expect,” she said.
Sainsbury’s sources its standard own-label milk through a dedicated group of about 300 dairy farmers – the Sainsbury’s Dairy Development Group – who receive a milk price that takes into account cost of production, including feed, fuel and fertiliser.
Meanwhile, The Co-operative Food’s customer director, Andrew Mann, said The Co-op’s price cuts would make a Co-op pint “the lowest-priced convenience pint in the UK”.
He added: “It also supports the practical needs of millions of Co-operative customers, who are shopping conveniently and locally every day, for high-quality fresh milk in portable sizes.”
The Co-op also stressed it would not be asking its milk producer group to contribute to its retail price reductions, adding it had decided to keep the price of four pints the same because otherwise people might pick up a four-pinter too cheaply only to throw a pint of it away.
Food waste fears
The Co-op’s concerns about food waste were echoed by one industry expert, who said the new price structure on milk adopted by Tesco – and now Sainsbury’s – could drive more consumers to trade up from two pints to four pints unnecessarily. “The pricing hierarchy is a bit odd – one pint for 49p or two for 89p and then four for £1. Perhaps some customers will trade up from two pints to four, and then this will lead to waste in some households.”
“We just wish retailers would focus on promoting the quality of fresh milk and the work they do in their supply chains, rather than following the lowest common denominator and slashing the price”
Rob Newbery, NFU
Speaking at a strategy update today, The Co-op’s head of retail, Steve Murrells, said he believed Tesco’s price cut would result in “significant waste”. “Rather than drop our four-pint price on the basis that we think that will only incur waste because we think people will drink three pints and throw away the other pint, we will drop the price today on one pint and two pint.
“The reason why we think that is important is that it will appeal to shoppers that shop conveniently with us - in and out for their one and two pints. It will enable us to build great value for more customers up and down the country. And we won’t change the price that we pay to our milk producer group – that is really important.”
Tesco announced on Monday it was cutting its four pints of own-label milk from £1.39 to £1 and six pints from £1.99 to £1.48. The move is part of a £200m investment in price cuts across key everyday items and Tesco has reassured dairy farmers it will not result in cuts to its farmgate milk price. However, the news nevertheless sparked concern among farmers that it could lead to a milk price war and undermine consumer perceptions of the value of milk.
Value
The National Farmers’ Union’s new president, Meurig Raymond, today urged retailers to value British food more. “We recognise that it is an incredibly competitive retail environment and that many retailers, including discounters, had already lowered the cost of staple items, such as milk, before this week’s announcement by Tesco. What’s important is that these price wars do not undermine the value of the products which farmers and growers work tirelessly to produce and meet world-class standards.
“What we want to see is decisions on pricing that ensure the longer term sustainability of food production – enabling continual growth and investment in the raw material production so that we are able to grow, innovate and provide choice to meet future consumer demand.”
The NFU’s chief dairy adviser Rob Newbery added: “With the opportunities for growth in the British dairy industry that exist today, we just wish retailers would focus on promoting the quality of fresh milk and the work they do in their supply chains, rather than following the lowest common denominator and slashing the price.”
At the time of writing, Morrisons and Waitrose were still selling their four-pinters at £1.39. Asda has already been selling four pints for £1 for some time.
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