Union tackles supermarkets on food prices

Solidarity said recent food price increases had been of an “unprecedented magnitude in almost every product group”.

The union conducted a survey last month at Pick n Pay, Shoprite and Spar stores in Pretoria.

“Supermarkets are robbing consumers blind," said Jaco Kleynhans, spokesman for Solidarity. He said prices had failed to decrease along with fuel prices.

Pick n Pay CEO Nick Badminton said the company shared Solidarity's concerns. However, he said “the news is not all bad”.

Badminton said sunflower oil had dropped sharply in price, margarine had come down and so had cheese. Frozen poultry is more or less the same price as it was last year, he said.

Solidarity's basket of food included Flora cooking oil, Albany white and brown bread, Clover full-cream milk, Stork margarine, Selati sugar, Tastic rice, Fatti's and Moni's macaroni, Impala maize flour, Ricoffee coffee and Omo washing powder.

Badminton said it was understandable that consumers were taking their frustration out on retailers. “However, retailers are reflecting price increases from suppliers,” he said.

Solidarity's survey said supermarkets were blaming suppliers for keeping prices high but suggested that retailers were merely price takers — a result of the retailers' failure to bargain with suppliers, which was to the detriment of consumers, especially the poor.

“There is also the assumption that supermarkets have no bargaining power. This is untrue as Pick n Pay have a 33% market share in the sector,” said Kleynhans. “Money is getting pocketed somewhere along the way.”

However, Pick n Pay has called for a meeting with its suppliers, which will be held next week, to discuss recent requests for increases and to gain clarity on why these had been requested.

The company said it did not profit from recent high food prices. “In Pick n Pay's case, our net margin — or what the company keeps at the end of the day — is just under 2 cents for every rand spent in our stores,” said Badminton.

He said the company was simply not able to trim margins further. “The call to cut prices should be more accurately made to the major suppliers and their suppliers, not retailers in SA.”

Despite an expectation from consumers that prices would fall when fuel fell, suppliers were asking for increases. Fuel was often a small part of the suppliers' prices, said Badminton.

Shoprite has previously said it tried as much as possible to pass savings on to consumers. It has called on manufacturers to pass on savings to retailers.

Steven Mallach, corporate affairs manager at Premier Foods, makers of Blue Ribbon bread, said when the company saw a sustained decrease in commodity prices, it passed on price savings as far as possible.

Source: Business Day

Published courtesy of