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Sainsbury's and Co-op wade into UK retail milk price war

By Mark Astley+

06-Mar-2014
Last updated on 06-Mar-2014 at 14:41 GMT

Sainsbury's and Co-op wade into UK retail milk price war

British retailers Sainsbury’s and the Co-op have followed Tesco’s lead and slashed their milk prices, but insist that the reductions will not impact milk producers.

In statements sent to DairyReporter.com, Sainsbury’s and the Co-op confirmed reports that they have knocked down their milk prices. This comes just days after Tesco, British largest retailer, announced it was reducing the price of its four pint bottle of milk from £1.39 to £1.

The Co-op now claims to offer "lowest priced convenience pint in the UK" after reducing the bottle price from 50p to 45p, and the price of its two pint bottle from 89p to 85p. Its four pint bottles will, however, remain the same at £1.39. Despite the price decreases, dairy farmers supplying the Coop will not be impacted, the company said.

“We will not be asking our British milk producer group to contribute to the price reduction,” it said in a statement.

Sainsbury’s has meanwhile knocked down the price of its four pint milk bottles to £1 - mirroring the price adjustment announced by Tesco earlier this week.

"We're matching prices on milk, but the point of difference at Sainsbury's will always be the values in our supply chain - giving our customers both value for money and the values they expect," said a statement issued by the retailer.

Price war

Speaking with DairyReporter.com earlier this week, Farmers for Action (FFA) chairman, David Handley, branded Tesco’s decision to re-price its four pint bottles at £1 “irresponsible" and warned that “a price war is about to kick off.”

“I have spoken with a number of retailers, who have all indicated that they won’t allow Tesco to get ahead, and will follow suit,” said Handley on Tuesday.

Within days, Sainsbury's and the Co-op have tabled competitive milk price reductions.

An all out milk price war is seemingly looming.

British retailer Morrisons, however, declined to discuss whether it is planning to follow suit.

“As a matter of course we wouldn't pre-announce price cuts in any category. It simply tips our competitors off about what we’re planning," Morrisons told DairyReporter.com.

Meanwhile, Asda said that it has no plans to reduce the price of its four pint bottle, which it has been offering for £1 over the last 13 months.

Reductions “devalue food”

Responding to this week’s actions, the National Farmers Union (NFU), which represents the interests of British farmers, has urged retailers “not to devalue food by entering into price wars which have the potential to undermine British farmers and growers’ businesses.”

“We recognise that it is an incredibly competitive retail environment and that many retailers, including discounters, had already lowered the cost of staple items, such as milk, before this week’s announcement by Tesco What’s important is that these price wars do not undermine the value of the products which farmers and growers work tirelessly to produce and meet world class standards,” said NFU president, Meurig Raymond.

"While Tesco has been quick to point out that this latest price promotion will not impact on farm-gate prices, we are never-the-less concerned about the impact of a price war having an undermining effect on farm gate prices and so we will be monitoring all retailers, to ensure that these price promotions do not get passed back to the farmer.”

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