Own Label Alternatives Gain Popularity as Consumers Seek Affordable Options
- Branded grocery suppliers increased unit profitability, CMA probe finds
- Increased prices faster than costs rose
- Consumers switched away from brands towards own label alternatives in most categories except baby formula
- Food price inflation driven by rising input costs like energy and fertiliser
- Branded suppliers of baby formula increased prices more than input costs
- Two firms control 85% of the market share in baby formula
- CMA concerned about lack of information for parents and supplier incentives
- Loyalty scheme pricing raises questions on consumer impact and competition
A recent investigation by the Competition and Markets Authority (CMA) has found that branded grocery suppliers have increased their unit profitability, contributing to food price inflation. The CMA’s review of competition in the supermarket sector revealed that many consumers switched to own-label alternatives for most products except baby formula, despite a 25% price hike over two years. Branded suppliers of baby formula also raised prices beyond input costs. Two firms control 85% of the market share and maintain high profit margins. The CMA is concerned about parents’ lack of information to make informed choices and suppliers’ incentives for competitive pricing in infant formula. Loyalty scheme pricing raises questions on its impact on consumers and competition.
Factuality Level: 8
Factuality Justification: The article provides accurate information from the CMA’s findings and analysis, cites specific examples, and includes relevant quotes from the CEO of the CMA. It presents a balanced view on the issue and does not include sensationalism or personal opinions.
Noise Level: 3
Noise Justification: The article provides relevant information about the CMA’s findings on branded grocery product suppliers raising prices faster than costs rose and the impact on consumers. It also mentions concerns regarding baby formula and loyalty scheme pricing. However, it could benefit from more in-depth analysis of the underlying causes and potential solutions to address these issues.
Financial Relevance: Yes
Financial Markets Impacted: Supermarkets, branded grocery suppliers, and own-label product manufacturers
Financial Rating Justification: The article discusses the impact of rising food prices on consumers and competition in the supermarket sector, as well as potential regulatory changes to ensure competitive pricing for baby formula.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the text.
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