Thrifty consumers set pace

A SURVEY of 200 Dublin shoppers confirms an unpalatable international truth for the food industry: cheap is best.

The shoppers made it clear they would choose cheaper imported food, rather than buy Irish.

That would not be such a big concern for farmers and food processors if it was limited to our domestic market. Unfortunately, consumers overseas, who consume most of Ireland’s foods, are even more price-conscious.

With our industry “firmly focused on consumer requirements”, according to Government policy statements, how efficient must farmers and processors become, in order to satisfy the demands of penny-pinching shoppers?

Two out of three Irish shoppers won’t buy Irish food if it is more expensive.

Thankfully, one in three Dublin shoppers said they will buy Irish food, even when it is more expensive than the imported food. Perhaps they appreciate the high quality of Irish goods.

It’s good news too that most Irish dairy products, for example, are cheaper in our shops than imported dairy goods.

But it’s in shops across Europe that much of our dairy food must pass the consumer price test.

It has been doing that for many years, with well-off Germans paying more for the great taste of Kerrygold butter, for example. But Germany is now the home of the discount retail sector, which is expanding at a seemingly unstoppable rate, as shoppers tighten their purse strings.

It is now considered intelligent in German society to buy groceries for the lowest possible prices. A person may drive a BMW and wear designer suits, but will still buy most of their groceries in a discount store.

Boosted by the increase in consumer price awareness, amid poor economic conditions in continental Europe, Aldi’s sales have increased by more than 25% during the last five years.

As Anna Albrecht, mother of Aldi owners Karl and Theo Albrecht, once said: “The worse off people are, the better off we are.”

The pensions time bomb is good news for the Albrechts, leaving more and more price-focused consumers watching the pennies, as national pension policies run into trouble.

The Americans call it ‘smart shopping’. Over there, Dollar Stores opened more than 5,000 stores in the past 10 years and is now growing its retail market share fastest in the highest income groups.

Across Europe and the US, other retailers are forced to either reduce prices and compete directly with discount retailers, or invest in service and quality.

Farmers and food processors hope the latter option wins out.

Unless consumers are prepared to pay a little bit more for quality, food industries will be in a race around the world to see who can sell the cheapest.