Steve Hawkes, Retail Correspondent
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The pint of milk was at the centre of a ferocious supermarket price battle yesterday as Asda and Tesco vowed to cut millions of pounds from customers’ shopping bills this weekend.
Asda said that it was slashing the price of a two-pint bottle of milk from 80p to 50p - its lowest price since 2001. Angry farmers said that the battle could force them out of business.
Spiralling food prices have been blamed for the steepest rate of inflation in 16 years. The average weekly grocery bill for a family of four has risen by 25 per cent in a year to £127.
This week, Tesco introduced Fresh ’n’ Lo milk, costing £1.06 for a two-litre bottle. On Wednesday, Asda and Sainsbury’s dropped the price of a two-litre bottle to 99p.
Yesterday, after Asda announced its latest milk price cut, Aldi, the discount chain, pledged to review its price. Tesco and Sainsbury’s had no plans to follow suit, but Tesco said that it was lowering prices on a third of products across its stores. The price of organic produce is to be cut by 25 per cent.
Asda’s latest 50p promotion will include orange juice and white bread, both of which are half price. Asda insisted that it was investing £1 million of its own money in the milk promotion and that no farmer would lose out. A delegation from the National Farmers’ Union (NFU) will meet Tesco today to seek guarantees that a price commitment to 850 farmers will remain in place.
Gwyn Jones, the NFU’s dairy board chairman, said: “We are playing with
people’s livelihoods here. The competition between retailers is intense. If
they are going to pay for these promotions out of their own money, then all
well and good. But we know both historically and from experience they will
come looking for farmers to help redress the balance. They don’t often give
up any of their margin for long.”
He added: “We recognise that customers are struggling. We have had a good six
to eight months, but our costs are going up and confidence is fragile. This
price-cutting could force more farmers to go under.”
The number of dairy farmers in England and Wales has halved to 14,000 in a
decade. Milk prices have climbed by almost 18 per cent in the past year.
Farmers were preparing to push for higher prices in the autumn round of
negotiations, given higher fuel costs. They claim that the cost of
production has climbed from 26.45p per litre to 28p and is edging towards
30p.
Mr Jones said that the price war threatened to undo much of the work done
over the past two years to convince shoppers of the need to pay a fair price
for milk.
A supermarket price war has been brewing for weeks, with consumers facing the
combined effects of rising food, energy and fuel prices. Asda and Morrisons
cut the price of petrol and diesel by 2p a litre on Monday. Sainsbury’s is
offering 5p off a litre of fuel to motorists who spend £50 on groceries.
The credit crunch has changed shopping patterns dramatically, with people
filling their baskets with cheap value lines and premium ready meals.
Year-on-year sales at discount chains such as Aldi, Lidl and Netto are
growing at up to 30 per cent.
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How fresh is "fresh milk" in a supermarket can anyone tell me?
Peter O'Connell, Manchester, UK
Farm Food is selling skimmed milk at 39p a litre,so why not buy from there?
J.Worthington, West Bromwich, West Midlands
we never Buy our milk at asda as it has ben over priced all year
A 2 liter bottle was £1. 54 pence
Our local cost cutterr wa £1.15
We do our weekly shop at asda but look arround still as asda get you on the main products (customers beware)
john, wash, england
I, like most people are far more careful about trying to have a zero throw away policy and I'm far more careful about trying to buy exactly what we need.
All in all I'm spending less rather than more just through being exacting with my shopping management.
Mrs J. Colling
Solihull, West Mids.UK
Mrs.J. Colling, Solihull, U.K.
We buy only organic milk; not because we're into organic per se, but that way we can be reasonably sure the milk is British and the farmer is receiving a decent price for his or her efforts. If the milk is local and we can get it delivered so much the better. Price shmice.
Laura, Tunbridge Wells, UK
This is the end of diary farming in this country.
Ian, Sturminster Newton, Dorset
The reductions are only for three days, so calm down everybody. Fear not, the only way for food prices to go is up. Most people eat far too much anyway so I really can't see that it matters. Eat less; buy real food and cook it (look up cook in a dictionary if the concept is odd) and save money.
C Smith, Norwich, UK
Excuse me for being sceptical but in Tesco's case these price cuts have only come about after swingeing price rises. So much so that their online grocery store began to resemble a mini-Zimbabwe. No wonder Lidl and Aldi are clearing up.
rob, london,
Following welcome reductions of prices both at the pumps and now in the supermarkets,might I now suggest a proper price war between the energy companies?
The first one to declare a serious transparant price reduction would surely be a winner ?
William Grierson, Kimpton, UK
If we purchase this reduced milk, we are as guilty as the supermarkets in the livlihoods of our own dairy business, so purchase it elsewhere or even go back to the milk man. Is milk really the loss leader the supermarkets think it is? Look at the increases made on the non-fighting line products.
Jeremy, Bracknell, UK
PR exercise, no more no less. These stores are feeling only for their image. The Government is feeling only for its popularity:
where did everyone go?
A Walton, Leicester, England
We still buy off the "milkman". He is totally reliable, battling through floods and snow to make sure we get our daily pint and what is more reassuring than having someone you trust travelling round your area at 3 or 4 in the morning. A great deterrent to any would be vagabond! Well worth the extra.
A.Williams, Cradley Heath,
Take 50p off the price of milk to get customers into your store and whilst your not "looking" or should I say checking they sneak 2p onto 50 other items. End result . They laugh all the way to the bank! It's true I' ve seen it going on.
Bernard Johns, Bourne End, England
The supermarkets should up the price of junk such as alcohol, crisps, chocolate, biscuits etc. and concentrate on lowering the costs of essentials - not luxuries.
I'm still seeing large multi-packs of crisps, fizzy drinks, ice cream, chocolate & low-grade ready meals on special offer.
Ridiculous!!
Darren Ward, Manchester, UK
I refuse to shop at the big supermarkets because they resort to these kinds of tactics; it is usually the producer who loses out. I would rather pay more and support our farmers instead of keeping shareholders happy and the money ending up in obscene bonuses for Chief Executives.
Paul, West Midlands,
Farmers are angry! The usual bleat from this part of the UK economy. For milk to be sold cheaply the supermarkets have to buy it from someone, if farmers got their act together they should create a group that acts as one and refuse to sell milk at an uneconomic price.
Robin Benson, Southampton,
When did you last hear of Asda or Tescos struggling? Their strategy seems to be to support the importers and producers abroad and then squeeze the british products so that they are going out of buinsess and we have to rely on imports. I am saving money by having fewer luxuries such as meat and fish.
Gemma , Oxford, uk
Derek,
There are sites out there that do just that. I used one recently to find a specific product and it told me where it was stocked and what each store charged.
Brian, Stafford,
Life is too short to trawl around the shops looking for the cheapest this and the best value that. There should be a site - like for petrol - to Google onto to see the cheapest all round value for food prodicts - or is there? I know that Waitrose is the dearest of the seven supermarkets in Andover..
Derek Clifton, Andover, Hampshire, England
Farm gate price for miilk is less than 25p per litre. When you look at the cost of production, high feed costs, hours involved, diesel price and the lack of govt support, how do our farmers keep going? We should support our farmers and paying a decent market rate for their milk or we will lose them.
Geoff Marshall, Rode, UK
They should lower the price of all food, also why do you have to spend £50 before you get a discount on fuel, no good if you are a pensioner, we dont spend that much.
Anyway I now go to Lidl and Aldi for most of my shopping. Now they do know how to discount.
Nite Owl, Ferndown, England
For all their buying power the supermarkets are still ripping customers off. My local Co-Op charges £1.60 for four pints, the shop across the road 99p. The answer to 'Rip-Off Britain' is to shop around. As a family of five we have reduced our outgoings by 40% over the last year...
Bill Bird, Wallasey, Wirral
adam fr bristol isright. milk goes off quickly so it gets discounted when the sell bydate comes. i have bought 2litres milk for 10p because its high price is causing a glut of unsold milk.
anthony wong, london, uk
Don't shop at either - ha ha ha !!!!
ian payne, walsall,
Supermarkets' obligation is to shareholders, not to their suppliers - therefore they will have to protect their margin by squeezing farmers. Supermarkets will only change their behaviour when we change our buying habits - if we keep looking for cheap food, then they will supply it.
Helen, Shaftesbury, UK
the milk price cuts affect everyone in the milk chain so whilst Asda say that they're investing £1m in the promotion and no farmer would lose out , smaller dairies already struggling to make ends meet just can't do this and the only way they can compete is by cutting prices they pay to their farmers
D Robertson, Glasgow,
Asda, Tesco - desperate? Ha! Don't make me laugh...
gary, Hadano, Japan
Andy: Why should the employees gain? They're paid a wage, aren't they?
John Annis, London,
Now lets see what the government are prepared to do to help, because for all their talk about how they feel for us, they havent actually done a single thing to help people, besides postponing a 2p rise on a litre of petrol, that we hadnt even had yet, so in effect they gave us nothing.
clive lowe, stockport, uk
Iceland have been selling 8 pints for £2 for weeks.
The worse the recession gets the better Iceland and Aldi will do.
You can bet their employees won't see a penny of it though.
Andy, Cheshire, UK
Stores may be starting price wars on certain items but they are simply raising the price of other products to offset the difference.
Adam, Bristol, UK