It’s been another busy week on The Grocer.
The news agenda has been dominated by the commotion sparked by No 10’s hastily developed plans to secure a supermarket price cap on key value items in return for suspending new legislative costs, such as the nutrient profiling model reformulation and the packaging tax.
The proposals certainly overshadowed the M&S results, with CEO Stuart Machin widely quoted after dubbing them “completely preposterous”, while another source dismissed them as “panic not policy”. In the end – and very quickly – Rachel Reeves backed down. Still, it may yet pave the way for a similar pricing intervention in Scotland.
The gaslighting of supermarkets and suppliers is perhaps unsurprising given widespread consumer misconceptions. As we reported this week, Brits believe supermarkets are making profit margins of 50%, while more than a third believe the price of eggs, bread and milk includes “a lot of profit for supermarkets” and “are far higher than they need to be”.
But as I argue in my leader it’s surprising that the Chancellor appears to share the same view given the extensive briefings she’s received.
Mixed messages for business
The Chancellor’s House of Commons update also raised eyebrows with the claim that “we promised to cut inflation – and we have”. That said, it did include other measures to help business: a 35% reduction in red diesel duty, a 12-month road tax holiday for HGVs, a suspension of the September fuel duty increase, and tariffs being lifted on over 100 different foods sold in supermarkets. We won’t find out the full list until till next week, but it’s thought to include everyday staples like baked beans, marmalade, and crisps, as well as citrus fruits and juices.
Reeves warned that she “expects supermarkets to pass these savings on in full”, adding that she will not tolerate any company ”exploiting the current situation to make excess profits at consumers’ expense”. She also promised tougher CMA powers to crack down on those “excess profits” – although exactly what those rules will be, she didn’t say.
She also unveiled the grandly titled ‘Great British Summer Savings’ scheme: a VAT cut from 20% to 5% on tickets to summer attractions and children’s meals in restaurants and cafés. I’m sure UKHospitality will be cracking open the fizzy lemonade.
Retail resets and market moves
Elsewhere, this week’s Big Interview is with Karen Graley, the ex-M&S packaging chief who is running the industry‑led UK Packaging PRO. With only four staff so far, it’s only just getting started, but tensions are already bubbling as Defra and PackUK appear to wobble on how much power they’ll actually hand over, while producers push hard to avoid EPR becoming a £1.5bn‑a‑year “stealth tax” funnelled into council coffers.
We also review the in-tray for new Boots boss Alex Baldock. He’s the man credited with dragging Currys out of a tailspin and turning it into a retailer the City actually rates. Steve Farrell examines whether he is the right man for the job at a company that is on the mend but still has big untapped opportunities in online, beauty and healthcare – plus the small matter of a potential IPO.
On the convenience retail side, it’s been a particularly busy week. On Monday the worst-kept secret in the industry was confirmed when Spar symbol group Blakemore announced its £7m acquisition of Appleby Westward Group. It was also no major surprise that Southern Co-op members approved the merger with the Co-operative Group, and in fact the second vote was even more resounding, with 97.8% of members ratifying their vote from earlier in the month We also broke the news that Morrisons is to shutter 100 of its company-owned Daily convenience stores, putting hundreds of jobs at risk.
On the supplier side, the CMA has cleared the final hurdle in Allied Bakeries acquisition of Hovis. Having initially raised competition concerns in Northern Ireland, it shows the CMA is clearly willing to listen to market participants’ opinions. So the path looks clear for the merger to go ahead.
We also consider the case for and against Ingredion’s bid for Tate & Lyle, and the departure of Simon Harrison from Princes is an eyebrow-raiser. Its share price is down 14% this week.
The latest IGD estimate for food price inflation is more conservative than recent punchy projections from the FDF, but the squeeze remains and Cranswick is profiting from consumers quitting expensive beef (and higher protein demand). Not surprisingly, beef farmers are in trouble, and there are also dire warnings about the prospects for the pig sector.
Meanwhile, plant-based brand Pollen & Grace has been slammed after introducing a range of chicken dishes.
Changing tastes
There’s been a lot of news in recent weeks about own label in terms of sales and NPD this week and our Focus On Own Label report explores developments in detail, including how retailers are winning share from brands through impressive NPD pipelines. Our Focus On Butter also shines a light on how health-conscious shoppers are transitioning from margarine to block butter amid the UPF debate.
Finally on Tuesday The Grocer hosted a mini-conference-cum-lunch for SMEs and challenger brands. Speakers included Amelia Christie-Miller, owner of Bold Bean Co (and last year’s entrepreneur of the year at the Grocer Gold Awards) and Alana Macfarlane Kempner, who charted her unusual journey (alongside twin sister Lisa) from being DJs to starting and selling The Gut Stuff to Hero Group.
Of course there’s loads more stories brilliant stories in this week’s magazine. And even more on thegrocer.co.uk. But those are some of my faves. And we would love to know your thoughts on our coverage. Or is there anything we’ve missed? We’re all ears! Please get in touch via LinkedIn or adam.leyland@thegrocer.co.uk.
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