Despite the price wars, consumers are still sceptical: only 17% think supermarkets are doing enough to help.
But the fact more people are aware of Tesco’s Big Price Drop than any other scheme, despite it being so widely derided in the media, is testimony to its brand and marketing power. After all, Asda’s Price Guarantee and Morrisons’ Big Price Crunch have been running since the start of the year.
The Tesco juggernaut has overtaken them. And Sainsbury’s, too, is going to have to devote big bucks if Brand Match is to gain traction.
Talking of juggernauts, Tesco was strongly implicated in the drop in Stobart Group’s profits this week, as it reported volume forecasts among major customers over the summer had been off by 10% to 15%. And the Big Price Drop sums up the grocery market rather well at the moment.
With Greencore’s share price deteriorating ever since it bought Uniq, it’s received a bid from an opportunist suitor. Thanks to Irish takeover panel rules, the suitor is a mystery, but so is the prospect of a deal. Normal takeover premiums are 30% to 40%. At about 20%, it’s hardly a ringing endorsement. And if I were a shareholder, I would be disappointed, following the £100m Uniq rights issue, about its Big Price Drop if a deal were to go through.
There are still noteworthy supplier performances out there. This week’s acquisition of Daniels Food Group by US player Hain Celestial felt like a reverse takeover, as the combined UK operations management clearly recognises Rob Burnett’s achievements in developing the formerly Singaporean-owned chilled business.
But there’s a lot of M&A activity among suppliers at the moment, and much more of it is distress-based than Daniels’ strategic offload, as bank nervousness reverberates through the market, with Cumbrian the latest example. That makes the Competition Commission’s approval of Kerry’s Headland Foods purchase significant. It’s going to make it much easier to do more concentrated deals in own label.
And I can’t help thinking the supermarkets have Dropped their Big Foots in it by complaining about monopolies, and promptly sourcing alternative suppliers. At what Price?