Asda has defended its pricing on banana in the wake of mounting criticism and rumour over its decision to cut retails to 46p a kilo.
Stories abounded this week as to how the retailer was funding the cut, including diverting profits from its alcohol sales to subsidise the low banana price. A spokesman for Asda told freshinfo: “The idea that us selling cheap beer is somehow allowing us to sell cheap bananas is utter nonsense. It is simply not true.”
The Leeds-based retailer also denied that its move had put pressured other retailers into following suit. The spokesman said: “If we sell at a price, that is up to us. Other retailers do not have to sell at that price at all. If they do, then that is up to them and if they do it with a clear conscience, then all our customers will get the benefit of cheaper bananas.”
Criticism has also been levelled at the retailer by sources in the fresh produce trade who believe that such low pricing will have a long-term detrimental effect.
One banana industry player told freshinfo: “Shoppers will just forget the true value of bananas - that people who grow bananas are mainly poor people, that the fruit is transported from the tropics, ripened and then transported to stores and all that costs a lot of money.”
The danger is perhaps particularly acute for those operating in the Fairtrade sector, he suggested. Sainsbury’s and Waitrose are both 100 per cent Fairtrade in their banana business but now competing on price with Asda. The source said: “It is costing Asda a lot to sell at 46p a kilo, but it is costing Sainsbury’s and Waitrose even more. In the short term most suppliers are in contractual arrangements with their retailers, but what happens when those contracts are up and it is time to renegotiate on price after this? How long can retailers like Waitrose and Sainsbury’s afford to stay in Fairtrade? And then what will happen to those producers?”
Asda’s spokesman said the company was “unrepentant” about its action. “We sell 30,000 products and have to balance everything we do. We believe this is the right thing to do and is simply part of operating in a competitive environment.”
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