Thursday 20 November 2014

True cost of brand loyalty revealed as prices soar at tills

Aideen Sheehan Consumer Correspondent

Published 10/03/2014 | 02:30

FAMILIES are being forced to dig deeper to pay for their weekly groceries as the prices of branded goods soared far faster than the rate of inflation in the past year.

The cost of some items has shot up by as much as 15pc when shrinking packet sizes as well as price hikes are taken into account.

A survey by the Consumers Association of Ireland has found that the cost of a basket of 19 top-selling items, including milk, sliced bread and sugar, rose by over 2pc in the last year.

The price hikes for branded groceries came despite general inflation stagnating at just 0.2pc in the year to January.

Customers are increasingly switching to own-brand goods as they are faced with price hikes for their old favourite brands.

The biggest increase in the survey was for Birds Eye frozen garden peas, with the price rising from €2.08 for 450g in 2013 to €2.14 for a smaller 400g pack this year.

This means shoppers would be paying €2.40 for the same quantity of peas as last year, which "means that the real price increase is in fact approximately 15pc", the CAI said in its 'Consumer Choice' magazine.

Some 13 out of 19 items surveyed rose in price between the last survey in January 2013 and the latest one in February 2014.

A litre of Avonmore milk rose from €1.14 to €1.24, while Donegal Catch cod rose from €5.40 to €5.54 and a kilo of Siucra rose from €1.45 to €1.55 and a large bar of Cadbury's chocolate rose from €1.72 to €1.87.

The price of Brennans bread and Kerrygold butter stayed the same, however, while the price of Heinz Ketchup, Kellogg's Corn Flakes and Erin soup fell.

And the price of Squeez premium orange juice soared by 13pc, from €1.60 in 2013 to €1.81 in 2014.

The average price of the basket of goods came to €41.95 – which was up 89 cents on last year's basket, a rise of 2.2pc.

Despite the survey, Central Statistics Office figures show that general food and beverage prices actually fell by 1.1pc during 2013.

However, the CAI survey shows that when it comes to many well-known brands, consumers are paying more at the till.

CASH-STRAPPED

The CAI said that the cost of brand loyalty may now be too high for many cash-strapped consumers – and explains why they are gravitating towards own-brand products and Aldi and Lidl to get lower prices.

CAI policy advisor Dermott Jewell said that the price rises for these everyday items over the past year and in repeated surveys since 2011 highlighted why consumers were changing to own-brand goods.

"With regard to these specific branded goods purchased by the majority of the population, the prices remain determinedly high on average," he said.

"Therefore we remain of the opinion that savings in this area for the average consumer have necessitated a significant change in purchasing habits, patterns and preferences," he said.

Many families had gone through the worst financial setback of their lives, yet this had not resulted in significant brand price reductions, he said.

Meanwhile, Kantar Worldpanel figures indicated that own-brand products account for 36pc of all groceries purchased as consumers cut their spending by switching away from branded goods.

Prices were measured in Dunnes Stores, Tesco and SuperValu, with special offers excluded because these are only temporary.

Excluding Siucra, which wasn't available in the same size everywhere, the basket of goods was cheapest in Dunnes at €39.96, while Tesco charged €40.43 and SuperValu was dearest at €40.92.

Several of the items were on special offer via discounts or as part of multi-buy offers, meaning a consumer could knock between €1 and €4 off the basket price depending on where they shopped.

Irish Independent

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