Competition or informal price fixing?

Sainsbury’s is completely awash at the moment with price check stickers on hundreds of branded grocery items from rice to sauces, from pizzas to soups. On the surface a sign that the supermarkets are competing with each other to keep down the prices of basic items at a time when household budgets are being stretched (the big marketing push at Sainsburys at the moment is the idea that you can feed a family for a fiver). 

Dividing the spoils in the milk industry

Many of us use the supermarkets as an example of monopsony power in markets - using their bargaining power to drive hard deals with their suppliers. New research presented at the March 2008 RES Conference provides evidence on how profits from each litre of milk sold are divided up among market participants. It is not good news for milk farmers struggling to make an economic profit and justify staying in the industry.

Information failure on plastic bags?

The Times yesterday carried an article on a dispute among scientists about the true scale of the risks facing marine life from the deluge of plastic bags find their way into our seas and oceans. The article came at the end of a week when Marks and Spencer introduced a 5p per bag charge for food sales and Gordon Brown threatened government action unless the supermarkets take fresh steps to lower the volume of plastic bags used annually.

The Economics of Food Waste

There was a terrific programme on the economics of food waste on BBC Radio 4’s Food Programme this lunchtime. “The Food Programme investigates the food waste created by restaurants, food manufacturers, supermarkets and airline caterers.” Details of the programme are available here. 

If we believe them, the scale of the mountain of uneaten food is vast and a stunning waste of scarce economic resources. Food waste comes from household bins, supermarkets, pubs, restaurants, airline caterers and other commercial food producers. From printing errors on packaging to errors on sell by dates, from food that is delayed in transit for just a few days to the dumping of wasted products from supermarkets that have failed to meet their sales targets, we are serial disposers of millions of tonnes of food waste.  How can we move towards a more sustainable future for our food industry? The methane gas from food waste accumulating in landfill sites is a significant and growing contributor to global warming. The programme offers rays of hope - there is money to be made from kitchen scraps that can be collected and converted into electricity and compost - but the scale of this is minute at present. A cultural change is needed - not least a change of behaviour by consumers and a move away from knee-jerk marketing from food retailers which take them away from longer term planning about how much food they need.

Growing food waste mountain blamed on get-one-free offers

Higher prices brewing for coffee

Record global demand and falling stocks have driven up the price of raw coffee beans around the world. And now these higher prices are filtering their way through the supply chain with latte lovers feeling the brunt when they queue up for their daily caffeine fix. There is an excellent article about this in today’s Financial Times which explains how changes in raw bean prices work through the wholesale market through to retail level. The key is the extent to which suppliers are able to pass on higher costs to their consumers.

Supermarket Sweep

The long awaited Competition Commission report on the market power of the major supermarkets is published today.  There is loads and loads of coverage of this .... so this blog will try to keep track of it and provide a gateway to some of the resources and comment available on the web

A European Supermarket?

The European Union Single Market commissioner has announced plans for a more systematic survey of price differences for similar goods and services across the 27 nations of the internal market. This BBC audio-visual clip from Mark Mardell is an excellent introduction to a teaching lesson on the causes of price divergence within the EU single market. Why is a litre of milk so much more expensive in the UK compared to Belgium. Why is a Nintendo Wii or a top of the range Nokia mobile phone significantly more expensive here than it is in many western European markets?

The EU believes that price convergence will be helped by giving consumers more information and that this transparency of prices might help to curb price discrmination by businesses that supply more than one country in the group of twenty seven nations.