Reductions draw sharp criticism from food industry

REACTION:TESCO'S PRICE reductions in some stores drew a generally favourable response from consumers, but heavy criticism from manufacturers and farmers.

The National Consumer Agency (NCA) said the move was long overdue and called for price reductions to be introduced in all of Tesco’s Irish stores.

Food and Drink Industry Ireland described the announcement as a “black day for the Irish food industry” and forecast a price war in which suppliers would be the losers.

Paul Kelly, director of Food and Drink Industry Ireland, said the strategy would threaten homegrown Irish brands. He repeated earlier calls on the Government to cut energy, transport and waste disposal costs which, he said, were making Ireland uncompetitive.

“It’s like Christmas Day,” was the response of Bill Tosh, head of Dundalk Chamber of Commerce, who said there were queues to get into Tesco’s stores in the town yesterday morning. “There’s a bounce back in the streets here; it’s like fair day in Ballycastle . . . This war isn’t over, however. Now we need competitive rates of VAT from the Government,” he added.

The Irish Farmers’ Association (IFA) accused the retail giant of using Irish meat, milk and vegetable suppliers as “cannon fodder” in a struggle to save market share and protect profits.

“Tesco’s tactics will squeeze producers and processors even harder at a time when the Irish food sector is under huge pressure, and farmers are already forced to produce at below the cost of production,” said IFA president Padraig Walshe.

“On the same day as Tesco announced a major new pipeline for imports, we are seeing their real agenda, which is to push Irish food processors, farmers and growers into the frontline in the latest round of supermarket wars.”

Mr Walshe said a new retail war would be unsustainable for Irish farmers and growers. He pointed out that Tesco’s UK parent reported record profits of £3.1 billion earlier this year.

NCA chief executive Ann Fitzgerald welcomed the price reductions and the increased competition they would bring to the retail market, but said they were long overdue after 18 months of favourable exchange rate movements.

Dublin Lord Mayor Eibhlín Byrne said the move did not address the underlying reason why consumers in the Republic were paying more. She urged shoppers to buy local: “Whether this is happening in Drogheda and Dundalk or across the Border in Newry, it’s still no use to shoppers and businesses in Dublin.”

Shoppers at Tesco’s Drogheda store yesterday welcomed the price cuts. One local woman said she had saved “about €25” on a €200 shop, while another said his wine purchases were significantly cheaper.

Asda, the UK retail chain which operates stores in Northern Ireland, welcomed the Tesco move, but insisted shoppers from the Republic would still make significant savings by crossing the Border to buy groceries.