Pricewatch recently received an intriguing example of supermarket pricing, illustrated by a Caesar salad purchase at Aldi, noting discrepancies that aren’t always to the customer’s benefit. A customer wondered why a 230g salad in a sturdy plastic bowl was priced at €2.79, whereas a slightly larger 240g salad in a simpler bag, only a few steps down the aisle, was priced at €1.69. This puzzle raised the question: why would a bagged salad, 10g heavier than its counterpart, sell for €1.10 less?
It piqued our curiosity as to how often shoppers might unthinkingly choose the more expensive option, the bowl, unaware of the savings they could earn with the bagged salad.
Two Caesar salads in the same store but with a vast price difference! Could this be the reason for your high grocery bills?
Soon afterwards, we observed a similar anomaly at a local Tesco. Bowls of Caesar salad weighing 270g were priced at €3.60, while bags of the same salad, a few yards away, were advertised as being “price matched” with Aldi. They were selling for the same price as Aldi, €1.69.
When calculated per kilogram, the salad in a bowl cost almost double the bag of salad in Tesco. A similar large price discrepancy was observed between the two near-identical products at a local Lidl as well.
We reached out to the retailers to seek an explanation. Their responses, while enlightening, might not have quite met their expectations.
Aldi explained that their bowl Caesar salad, sold “in the food-to-go chiller”, was priced lower than other full-price supermarkets. However, because it was a convenient product enjoyed by customers on the move, its production costs are higher, thus justifying its higher retail price compared to the bagged salad.
Despite Aldi being cheaper than other “full-price supermarkets”, we were perplexed by their justification of the “higher production cost”. Is Aldi – a store renowned for offering competitively priced items like jack hammers and blow torches – genuinely suggesting that the process of packaging some salad leaves, croutons, cheese and dressing in a plastic bowl rather than a bag ups the price by €1.10 each time?
In response to the query on varying prices for seemingly similar salad options, Lidl, a well-known supermarket, mentioned that different factors such as packaging, sealing and options for serving can lead to varying costs. They also assured that their Meadow Fresh Caesar salad bowl and salad pack, despite the minor packaging difference, are competitively priced in comparison to similar products in the market.
However, the explanation did not seem completely adequate, since the increased cost for packaging the salad in a bowl compared to a bag, assigned by a retail giant of Lidl’s stature, came across as somewhat strange.
The relevance of comparing prices with those in other supermarkets can also be questioned, but no tangible evidence is available to argue this aspect either.
On the other hand, with an aim to unravel this mystery, Tesco, another supermarket, offered a more detailed account. A spokesperson stated that each of their Caesar salads, despite seeming identical, actually have distinct recipes. For example, the premium hand-assembled salad bowl features Little Gem lettuce instead of Cos lettuce, contributing to its premium price. Furthermore, there are changes in the weightage of ingredients like dressing, croutons, and cheese in both variants. Ultimately, all their products are delectable and cater to a variety of customer budgets.
Notwithstanding the details provided, the puzzle still seems unresolved.
We took time to examine the pricing of Tesco’s salad components as revealed by their representative to understand if the price difference between bagged and bowl salad could be justified. By adding the cost of the more expensive lettuce, croutons (6 cents), salad dressing (5 cents), and cheese (12 cents), we could see that the bowl of salad was at most 25 cents more expensive to make – a liberal estimate which still resulted in a cost of €13.33 per kg compared to €7.04 per kg for the budget option.
This raised several thoughts. If the price of the salad bowl bears scant relation to the cost of ingredients or production, then how do retailers decide on the pricing? What portion of that price is influenced by price matching?
Considering that all sellers are likely making a profit on their bagged salads at €1.69, we could reasonably assume that substantial profits are being made on salad bowls that are retailing at nearly double the cost. We estimate that even if the cost was reduced significantly for this single product, retailers could still make profits.
One can’t help but speculate how many more items are being sold at prices that significantly exceed the cost of production and materials and how much this discrepancy is adding to our weekly grocery bills.
It is well known that retailers closely watch the pricing strategies of their competitors for all range of products and aim to match or slightly undercut those prices.
The largest factor influencing Irish consumers’ choice of stores is the cost of groceries as shown by more than half of the participants in a KPMG study conducted in April.
The previous summer showcased an intense demonstration of price-matching. A year of soaring prices was followed by much-needed reduction when leading retailers engaged in a competitive pricing war with regard to two essential items. Initially, Lidl proclaimed a 4% cut in the price of its own-brand milk at 6pm one Friday evening. Within six hours, Aldi, Tesco, and SuperValu all announced identical price reductions.
Several days ago, Tesco took the lead by reducing its 454g self-brand butter by 40 cents to €2.99, catching its competitors by surprise. Soon after, all other companies matched Tesco’s price drop. This doesn’t necessarily imply collusion, but rather showcases the stiff competition among these retailers. It’s left us pondering whether, if a single retailer decided to aggressively slash their prices now, would it trigger a similar response from the competition?
The silver lining here is that, while the decrease in food prices in Ireland isn’t as significant as desired, it is rising at a much slower pace compared to last year. In particular, grocery inflation is hitting its lowest mark since the incursion of Russia into Ukraine in March 2022. This invasion ignited a cost of living crisis that has drained thousands of euros from Irish families over the last couple of years.
Recent statistics from Kantar Worldpanel depict the grocery inflation rate to be 2.5% over the 12 weeks ending June 9th, a drop of 13 percentage points from the same period the previous year. The study continues to show that despite the continuing drop in inflation, 25% of the sales – in terms of value – are influenced by promotions, indicating that Irish consumers are relentlessly hunting for bargain deals.
Another research study underlines how the price of groceries is the greatest determinant on Irish buyer’s choices, with over half of the participants in a KPMG survey in April attesting that cost is the key influencer in their shopping habits. The KPMG’s Next Gen Retail survey stated, “numerous consumers have implemented various cost-reduction schemes to combat the escalating cost of living.”
One such cost-cutting measure that could be beneficial for us in the future would be to examine unit prices more thoroughly to ensure we are not overpaying for items we add to our shopping charts.