Tuesday, 1 May 2018

Supermarket Sweep

So Sainsbury and ASDA are to merge. Doubtless the argument of less consumer choice will be articulated somewhere, but with profit margins of between 1% and 3%, it's somewhat academic. However, Sainsbury has said it will lead to cheaper prices, so with margins that thin, you know who is going to bear the brunt - yes, the manufacturers. However, if the manufacturers get their acts together, they can simply refuse to deal with the new mega-market. Interesting times.

The problem with the big supermarkets and their focus on branded products is that we consumers have to pay for both the manufacturer's advertising and the supermarket's advertising - a double hit - meaning the products are high priced to start with.

You won't see Aldi's and Lidle's products advertised anywhere, except by Aldi or Lidl, meaning they are cheaper. Invariably their products are made by the same companies that make the branded products, but sold through Aldi and Lidl as a means of market extension. Many people (like me) don't give a damn about branding and just want a quality product at a reasonable price - we would never buy brands, if we can avoid it. Similarly there are people who are addicted to brands. The two markets will meet only rarely, so it makes financial sense for manufacturers to be in both.

Did you know that R and R Ice Cream (can't use ampersands in Blogger) is the largest ice cream maker in Europe and the 2nd largest in the world? You've probably never hear of them, but they make almost all of the supermarkets' own-brand ice creams.

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