Wednesday Oct 7 Banana Price War at Grocery Multiples A supermarket price war has broken out after Asda slashed the cost of its bananas to the lowest level in 14 years. The store insisted that it had made the cut to help hard-pressed families and called for its rivals to do the same. But the move has angered other High Street stores and banana suppliers, who accused Asda of trying to create 'a pointless price war'. There is concern that shoppers will come to expect low prices and that the cost will eventually be passed on to growers in developing countries. The latest cuts mean that Asda - which sells two million kilograms of bananas a week - is charging 46p/kg. On August 25, the price was 84p/kg and 99p/kg last Christmas. Trade magazine The Grocer said Tesco and Sainsbury's had been forced to match Asda's price while the cost of bananas at Morrisons has fallen to 57p/kg and 59p/kg at Waitrose. Alex Brown, Asda's produce director, said: 'Our job is to do all we can to help cut the cost of living for families across the UK, and there's no better way of doing that than by lowering prices on core staples that go into millions of shopping trolleys every week. 'We're footing the bill so can guarantee the move won't have any impact on the price we pay our suppliers.' However, Mark Price, Waitrose managing director, said that the 'pointless game' was costing his supermarket more than £100,000 a week. 'Asda crashed the price of bananas and you have no option but to follow the market and be competitive,' he added. A major banana importer said: 'It is a ridiculous price and there is no rhyme or reason to it. There is nothing happening on currency or fuel to explain it.' Yesterday, an industry expert claimed the move was a ploy by Asda to put pressure on the profit margins of its rivals. Although Asda is taking a financial hit itself, Tesco sells almost twice the number of bananas while Sainsbury's will have to swallow larger margin losses due to its policy of only selling Fairtrade. The source said: 'If it is costing Asda £500,000 a week then it will be costing Tesco £1million and Sainsbury's must be hurting big time.' Source: www.dailymail.co.uk - 5 October 2009

index