- “Price increases greater than their costs” have been implemented by suppliers of branded goods.
- During the past 2 years, the unit profitability of approximately 75% of branded suppliers of goods.
- The regulator is hoping that more competition will result in lower prices for branded goods.
The competition watchdog claims that suppliers of branded products, such as baked beans and pet food, have “pushed up prices by more than their costs”.
Ten product categories have been investigated by the Competition and Markets Authority (CMA) to determine whether consumers, who are already having a difficult time due to the ongoing cost of living crisis, are being taken advantage of.
Branded goods
According to research conducted by the Consumer Goods Administration (CMA), during the past two years, the unit profitability of approximately 75% of branded suppliers of goods like pet food, baked beans, mayonnaise, and infant formula has increased, which has increased the inflation of food prices.
But in an attempt to save money, consumers moved to less expensive supermarket brand alternatives, so the changes were probably counterproductive to some extent. The regulator is hoping that more competition will result in lower prices for branded goods.
Brands responded to the inquiry by saying that instead of lowering the regular price of their products, they would give discounts to consumers when their costs began to decline.
More research, according to the CMA, is required in the area of baby formula, which has been the focus of reporting by Sky News and has led the World Health Organization to claim that families are being “exploited.” It did, however, discover evidence of unwarranted price increases, with consumer costs rising by 25% over two years, and it raised concerns about the two companies’ 85% market share.
In response to the CMA’s findings, the manufacturers’ industry group proposed that the pricing represented value. According to Karen Betts, CEO of The Food and Drink Federation, branded products are more expensive than own-brand because they are constantly investing in quality and innovation.
She also stated that food and drink prices in the UK are still lower than average EU grocery prices. Which?’s head of food policy, Sue Davies, stated that the CMA’s results confirm the company’s worries that consumers who frequent supermarkets’ convenience store branches might have trouble finding more reasonably priced food.
The regulator released this update after its earlier conclusion that lower competition among supermarket chains was not the cause of store price increases. To promote price transparency, it also called for stricter regulations on so-called unit pricing.
