The white label war intensifies. Supermarkets intensify their strategy with new product launches from their own distribution chain to offer a basic shopping basket at more attractive prices and thus gain market share in an environment of fierce competition due to inflation.

In this complex context, some of the large supermarkets operating in the country are placing on their shelves basic white label foods that, until now, were not available, which is leading to considerable price drops in certain products with reduced VAT.

This has been detected by the Association of Financial Users (Asufin), which since the beginning of the year has been monitoring the evolution of the prices of the subsidized shopping basket in the five large distributors in the market: Mercadona, ECI (El Corte Inglés Group), Carrefour, Alcampo and Dia.

The most striking case is that of ECI, which this May has begun to offer its customers white label flour and pasta. As a result, the price of flour in their supermarkets has plummeted by 50%, noodles have become cheaper by 34% and macaroni by 46%.

Carrefour, meanwhile, has also launched private label flour this month, leading to a price drop of 55%. And the same strategy has followed Alcampo, where the price of flour has decreased by 17% compared to April, after incorporating the own brand product.

Due to these launches of white label flours in these three chains, in the global calculation of the five supermarkets the price of this food has been reduced this May by 24.4% compared to April, since in Mercadona and Dia it has remained stable.

On the other hand, it is observed how the withdrawal of white label rice by Carrefour has caused an increase in the price of this product of 38% in its establishments, while in the rest of the super the evolution has been null. In this way, the impact on prices of business decisions to launch or withdraw products from the distributor is clearly seen.

"White labels and promotions are distorting the Government's VAT reduction," they say from Asufin. However, the monitoring of prices since the beginning of the year shows that the basic shopping basket has become more expensive by 3.5% despite the fact that VAT has fallen from 4% to 0% on bread, flour, milk, eggs, fruit or legumes and from 10% to 5% on oils and pasta.

Specifically, the average basket cost 29.61 euros on January 30 (Asufin takes this date as a reference to clean the return effect of Christmas) and the same purchase, on May 25, comes out for a total of 30.66 euros. "The discounts are only occurring in specific products because of promotional and white label strategies, because supermarkets are offering wider ranges of products, not because of the VAT reduction," insist Asufin.

Withdrawal of the measure

The distribution sector already takes for granted that the Government will withdraw the bonuses to the shopping basket as soon as the measure touches its expiration date, on June 30. And that's when they expect a strong rebound effect. "Although costs are being contained at the beginning of the chain, pressures persist and as soon as VAT returns to its normal level, prices will rebound," they predict.

The economic vice president, Nadia Calviño, has already slipped that the VAT reduction will not be extended beyond June because Brussels is asking that the aid be withdrawn now. The decision will depend, in any case, on how inflation evolves in the coming weeks.

  • Feeding
  • Supermarkets
  • Taxation
  • Mercadona
  • El Corte Inglés
  • Carrefour

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