Iceland boss Richard Walker has said big brands need a “reality check” and “the excess they charge isn’t appropriate”, as prices of some of the leading food and drink brands in the UK have risen by as much as 60%.
Walker appeared on ITV’s Good Morning Britain earlier today, where he spoke to Ed Balls and Susanna Reid about how businesses – specifically retailers and leading FMCG brands – needed to step up and do more for households struggling to meet the rising costs of fuel, mortgage and food costs.
In the wake of the recent Tesco vs Heinz price dispute, much of the conversation hinged on whether big food and drink brands were asking too much for their products.
“I think there is a reality check that’s required,” Walker said.
“There is a brand tax you know, every consumer loves and knows the well-known brands and they’re prepared to pay more for them. But the reality is that with the cost of living, the squeeze on household budgets, brand owners do have to get real and understand that the excess they charge is perhaps not appropriate, especially when cost of living is going up.”
Referring to the now-resolved pricing row, Walker said that Iceland doesn’t have the same negotiating power as Tesco and so “can’t bully [brand owners] and kick them out”.
“But we are trying to persuade them to lower their profit expectations so that they continue to have viable business models in the future,” he added.
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Walker also shared how consumers are changing their shopping behaviour in-store, pointing out that many are buying less expensive or own label brands and revealing that
is “increasing the amount of own label brands” so it can to continue offer better value options wherever possible.
With the number of baskets dropping and consumers switching to frozen food to help manage their household budgets more effectively, Walker also revealed that some people are managing rising costs by simply buying less food – which he described as “a fairly key indicator”.
Iceland’s online business has grown significantly over recent months, something Walker puts down to people not wanting to spend the money on fuel to drive to the shop.
“They’re taking advantage of a free home delivery service and actually shopping more online as well,” he said, adding that the threshold for free home delivery has been dropped to £35 for online orders and just £20 for in-store deliveries.
“That’s unlocked 1,000s more slots every week for customers who are perhaps the most squeezed,” Walker said.
“We are bearing the brunt of that because we are trying to do everything we can to help people… but every business needs to do everything they can now.
“Quite frankly, some of the demographics we serve are really hard-pressed and I was worried about those customers spending £25 a week on food before the cost-of-living crisis. So now, you know, it really is tough out there.
Walker also said that Iceland will be prepared to accept lower profits this year as a result, saying “They’ll be significantly down”.
‘There is a reality check that is required.’
Managing Director of Iceland @icelandrichard tells @susannareid100 and @edballs that big brands ‘have to understand that the excess they charge isn’t appropriate’.
He also explains how shopping behaviour has changed. pic.twitter.com/gygQJ9SdNY
— Good Morning Britain (@GMB) July 12, 2022
