Supermarket profits not ‘notably high’, consumer watchdog claims

AN UPDATED REPORT by the Competition and Consumer Protection Commission (CCPC) has published the profit margins that some supermarkets in Ireland have.

The details are not extensive as Dunnes Stores does not publish its financial records, while Lidl combines their Irish and UK accounts.

The CCPC today said that the margins recorded by some of Ireland’s largest supermarkets, by market share, are not “notably high” when compared to stores internationally.

According to the report, Tesco’s operating profit margin, as of February 2024, was recorded at 3.7%.

Supervalu and Centra’s owner and operator Musgrave’s profit margin was 2.4% and Aldi’s profit margin was 0.8%, as of 2023.

Meanwhile, Lidl UK’s accounts for 2023/2024 show a profit margin of 2.1%.

Social Democrats TD Jennifer Whitmore repeated calls she recently made in The Journal‘s Voices section for supermarkets to publish their financial records. She said more needs to be done to compel retailers to be more transparent.

In reference to recent debates in the Dáil, she added that it is “wholly unsatisfactory for the consumer regulator to be denied information” necessary for its analysis, claiming that it is “outrageous that the government has not acted” to compel retailers.

The CCPC today said that the range of stores available in Ireland has helped to limit price increases. It noted that previously reported increases in the cost of agri-food products and high inflationary periods have also resulted in more expensive grocery bills.

Despite that, price increase have not resulted in supermarkets generating larger profits, the CCPC claims. Whitmore has questioned the legitimacy of the CCPC’s “nothing to see here” claims, highlighting that the watchdog did not have access to all the relevant data.

Analysts found profit margins from the three firms were “notably lower” than those of some processors, such as Unilever at 18.4% and Kerry Group at 11.2%.

This suggests that ‘sticker-prices’ may be impacted by rising processing costs. Another driver of increased costs in recent months, according to the CCPC, has been the cost of agri-food products.

The cost of milk and beef in Ireland is increasing faster than anywhere else in the EU. Agricultural economists say there are a few factors at play, including Ireland’s reliance on particular agri-food, such as dairy.

New data from the Central Statistics Office today highlighted large increases in the cost of groceries, as the cost of a pound of butter has risen by €1.08 in the last 12 months.

Whitmore today called on the Government to be more forceful in its pledges to reduce grocery prices, through providing greater power and autonomy to the CCPC to scrutinise retailers’ business practices.

Today’s report claims that the margins in Ireland align closely to those observed in the UK and other parts of Europe.