Sainsbury’s Hikes Cost Of Meal Deal Again

Sainsbury’s has increased the cost of its standard meal deal by 5% – the second hike in less than a year.

According to trade publication The Grocer, the price of a main product, a side, and a drink at the supermarket has risen this week from £3.75 to £3.95. This follows a 25p increase in July 2024, meaning the price of the Sainsbury’s meal deal has increased by 12.8% over the last year.

The cost of its premium meal deal has remained unchanged at £5 since it was introduced in 2022.

Sainsbury’s did not tell The Grocer what was driving the latest price increase. However, the report noted that the supermarket has recently expanded its food-to-go range, adding 35 new products.

The hike means Sainsbury’s meal deal is now priced significantly higher than its rivals. Tesco’s equivalent meal deal costs £3.60 for Clubcard members, whilst Morrisons charges £3.60 for More Card holders.

A Sainsbury’s spokesperson insisted that it “continued to offer one of the best value meal deals around”.

NamNews Implications:

• Consumers who benchmark inflation by the official stats…
• …will perceive a 12-month 12.8% increase in price of a Meal Deal as greater than inflation.
• Couple this with the fact that Sainsbury’s ‘meal deal is now priced significantly higher than its rivals’…
• …means that Sainsbury’s and rivals will watch consumer reaction with interest.

Inflation, the next planning factor?

Given the post-Brexit fall in the pound, it follows that imported ingredients will cost more…
Add the recent BOE reduction in interest rates (0.5% to 0.25%!!), means the pound is even less attractive vs. other currencies.

Stir in the fact that UK food manufacturing costs are rising by around 10%, and you have a recipe for increased inflation, causing prices to rise in line with demand…

Except for UK retail

Already on reduced margins, major multiples cannot afford to absorb any cost increases.  Equally suppliers, having stripped out any ‘excess' costs, are unable to take any more pain... Meanwhile, the price war/s make it unlikely that shelf prices will bear any significant upward movement without loss of share.

All of this means increasing pressure on the mults, loss of market share and the growing importance of alternative routes to consumer.

For suppliers it means re-balancing their customer portfolios to reflect the new realities, secure in the knowledge that at least some of the competition will await a return to normal before being forced to change…