Banana prices have plummeted to an all-time low amid heightened in-store cost-cutting, forcing many wholesalers to take desperate measures.
Following Asda’s move to cut banana retail prices to 68p a kilo, FPJ understands that some wholesalers have turned to purchasing by the box directly from supermarkets.
The price cut represents a 37 per cent decrease in banana prices in the UK over the last three years and 50 per cent since 2002. Insiders estimate the total loss to the industry could amount to £461 million.
Sales of bananas have been rising steadily for more than a decade, up almost 100,000 packs a year, but despite this, consumer expenditure has been static, levelling at around £580 million over the past four years, according to TNS data.
Import prices have fallen steadily from 16p a finger to less than 14p on average in the last six years.
One insider told freshinfo: “The prices are crazy and cannot be maintained without seriously affecting the market. [Loose bananas] were already down at 78p per kilo but this is ludicrous - a box of bananas to wholesale is £20 but the equivalent retail is £11.20.
“One wholesaler went into a supermarket and bought four boxes of bananas last week… there just seems no way [the cut] can’t go back to the grower.”
Amid fears that other supermarkets may follow Asda’s lead and possibly take profit out of the supply chain, the retailer was robust in its defence of the pricing. Matt Leamon, banana buyer for Asda, told freshinfo: “We are determined to pass savings on to the consumer, but not at the cost of our suppliers.
“None of our suppliers will be affected by this. The cut is an investment by Asda to reward its customers and we have an annual price agreement with our suppliers, which we are set on.”
Tesco declined to comment, but as freshinfo went to press it had already matched Asda’s price.
One importer said: “Asda says it is investing with its growers and taking the hit, but its move is obviously hurting Tesco and Sainsbury’s. Supermarkets say they are the consumer champions but if they carry on like this, they are going to decimate the industry. It is a difficult one to argue and the money at the moment in bananas is just horrific.”
The Asda cut put bananas, along with oranges, as the lowest-priced fruit on the high street, when studying the eight leading products.
Loose bananas have been consistently below the Retail Price Index (RPI) recommendation for five years, with prices set to be an average of 45p below RPI in 2009.
Based on the price differential of 40p (representing the price fall since 2002) and current volumes, a full market move to this price could amount to a revenue loss of £349m, excluding a loss of revenue from inflationary factors, which would be a further £112m. This would take £461m out of the industry overall, according to industry information.
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