Big four stand pricing ground

04 May, 2007

Supermarkets tell MPs they will not stop being competitive on alcohol

Supermarket alcohol prices will not increase, the big four grocers have insisted as they deflect on-trade calls for a crackdown on drink promotions.

Representatives from Tesco, Sainsbury's, Asda and Morrisons put up a robust defence of their pricing strategies as they faced MPs at a House of Commons meeting called by the All Party Parliamentary Beer Group. The group, prompted by on-trade pressure, has drawn up an Early Day Motion calling for an end to "irresponsible drinks promotions" in supermarkets.

While they would not be drawn on the issue of loss-leading deals, all four representatives said price competitiveness was a key part of business success.

Sainsbury's head of legal affairs, Nick Grant, said: "As retailers, we would never agree to raise prices. That would be the net effect of the Early Day Motion. That would be unlawful and anti-competitive. We will not do that, it would be against the customers' wishes and against customer choice."

Asda's head of government affairs, Bernard Hughes, said: "Price is in our DNA. As a business, there is no way Asda will increase its prices."

Grant added: "It's incredibly difficult to work out what a loss-leader would be. Who would audit that? We would be creating a complex regulatory environment. It would be impossible to police and an accountancy nightmare."

The supermarkets denied links between cheap alcohol, bulk buying and binge drinking. Tesco's government affairs manager Emma Reynolds said: "Most people buy alcohol as part of a larger family shop ... the point of promotions is to get customers to try new brands."

Beer group chair John Grogan MP said he did not want to see the issue resolved by "politicians setting the price of beer or strict regulations". He added: "No one has defended loss-leading pricing. If the Competition Commission finds that you're loss-leading you will no doubt remedy it."

Grogan said: " What we want to do in terms of the Parliamentary Beer Group is to make progress on a voluntary basis just as brewers and pub companies did a couple of years ago."

Analysis, page 14

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