Iceland’s decision to increase the price of four pints of milk is significant, but it is too early to tell if it will herald the end of the supermarket milk price war, industry experts have said.
The retailer announced on Monday (19 October) it was moving to a “simpler and clearer pricing structure” for milk and increased its four-pint SKU from 89p to £1. However, it also cut the price of other SKUs at the same time, slashing one pint from 50p to 25p, two pints from 75p to 50p, and six pints from £1.85 to £1.50.
Iceland has long been a key driver in the milk price war, and the four-pinter is the best-selling milk SKU and therefore of huge strategic importance. But commentator Ian Potter cautioned it would take a “big hitter” such as Asda to follow Iceland before talk of an end to the price war was appropriate. “If they moved, the rest would follow,” he said.
At present, Asda, Aldi, Lidl and Morrisons still charge 89p for four-pinters.
Reactions from farmers to Iceland’s new milk prices were mixed. Farmers for Action urged other retailers to follow Iceland’s lead, with FFA chairman David Handley saying the retailer had “set the challenge for other retailers” to do the same. “If every retailer did this, British dairying would be a lot healthier than it is today.”
However, NFU dairy board chairman Rob Harrison pointed to Iceland’s price cuts on other milk SKUs and said “Iceland has done nothing to support farmers”.
Iceland said the cuts would not affect the price paid to suppliers.