The Competition & Markets Authority is expected to complete the second phase in its enquiry into ‘profiteering’ this autumn. It will be fascinating to see how it approaches the task. And what specifically it will make of results like those of Heinz, which came out this week, and show the manufacturer recorded bumper profits of £161m, up £14m on last year, despite its much-publicised trade dispute with Tesco that summer.
On the one hand, Heinz maintained gross margins at an enviable 29.8%, despite a 5% decline in volumes. On the other, the 9.7% increase in profits certainly didn’t keep pace with sales, up 12.8%, let alone the 21% increase in price. And profits were also boosted by an extra week’s trading, says Heinz, which had a “disproportionate” impact.
Heinz is one of several leading multinationals that pushed through price hikes, but deducing evidence of profiteering will be enormously difficult to prove, with myriad factors to weigh up, including anticipation of a decline in volumes, boosts from hospitality and the impact of more people working from home and the delays in negotiating cost price increases from supermarkets, coupled with pressure to reduce them.