Asda was the first to put up the price of 250g of own-label English mild white Cheddar by 9% to £1.77, or £7.08/kg, which represents the first retail increase since May. That has since been followed by the other leading supermarkets, who have all price-matched Asda at £7.08/kg, according to The Grocer 33 data.
The price increase has been on the cards since Asda announced in July that it was increasing the price it paid supplier First Milk Cheese Company for cheese by £300/tonne. Asda said it had made the move to ensure that milk continued to go into making cheese at a time of severely restricted supply. This week’s price increase equates to £600/tonne.
The price of cheese has risen dramatically over the past year. Twelve months ago, mild English Cheddar cost an average of £4.80/kg in the leading supermarkets. But increases of nearly 50% have seen the average price rocket to £7.08. Many processors had put up the prices paid to farmers in recent weeks in recognition of cost increases on farm, prompting the retail increases, said Huw Thomas, head of market information at DairyCo.
Supermarkets had also suffered some reduction in margins over the past year, he claimed. A further industry source, who did not want to be named, said Asda’s move was a case of “margin maintenance” as it sought to get its margins back to previous levels.
“Energy and packaging costs have gone up a lot, putting pressure throughout the chain,” the source said. “The supermarkets won’t want to take those out of their margins.”
Asda is also believed to have launched a promotion on Smartprice cheese, with the company offering its cheapest Cheddar at £1.87/kg this week. Asda would not confirm whether a major cheese promotion was under way.