FDF Response to CMA Autumn Update

The CMA have released the latest findings of their ongoing review, which follows an initial assessment in July that focused on retail competition in the groceries sector. This identified 10 product categories including milk, baked beans and baby formula for further analysis on competition across the supply chain, with a particular focus on branded and own label food suppliers. The CMA found that, some branded suppliers have pushed up prices by more than their costs increased, but in most cases shoppers can find cheaper alternatives. The CMA are to examine further whether ineffective competition in the baby formula market could be leading to parents paying higher prices and will also launch a review of loyalty scheme pricing by supermarkets, considering its impact on consumers and competition in the groceries sector. The full report can be found here.

Commenting on the findings Karen Betts, Chief Executive, The Food and Drink Federation said: 

“Companies across our sector are acutely aware of the cost of food and drink and the pressure this is putting on household budgets, adding to raised energy, mortgage and other costs.  

“Food and drink manufacturers have been grappling with rising input costs since September 2020, and they have done all they can over the past three years to absorb these costs to shield shoppers from the full impact of inflation. However, with inflation hitting a forty-year high earlier this year, some price rises have been unavoidable, which have varied according to product and manufacturer.  The huge rises in input costs we’ve seen have undoubtedly been very challenging – one shock would have been difficult, but the successive shocks of COVID-19, Brexit and the war in Ukraine, alongside droughts, wildfires and flooding in Europe in particular, have eroded our sector’s resilience significantly.  As a result, across our sector margins are at a 40-year low, insolvencies have doubled and investment has dropped by more than a third.

“Shoppers in the UK can take some comfort from the fact that, even with the levels of inflation we’ve seen in recent months, food and drink prices here remain lower than average EU grocery prices.  The UK grocery market is highly competitive and offers a wide choice of products at a range of prices.  Where branded products are more expensive than own-brand, this is because of the constant investment in quality and innovation that brand-owners make.  If that investment doesn’t happen here in the UK, the amount of imported food and drink will certainly go up – with consequences for jobs, competitiveness and food security.”