Roger Ramjets
Philosopher
Math fail.As they rolled their eyes at the frustratingly familiar sight of price markups in grocery store aisles, shoppers in 2022 might have wondered whether corporations were doing everything they could to keep prices down as inflation hit generational highs...
Profits for companies in some of the world’s largest economies rose by 30% between 2019 and 2022, significantly outpacing inflation,
Greedflation in the food industry – myth or mystery?
The global food industry has resounded an emphatic no to the claims of jacking up prices to influence profits and margins, or keeping prices artificially high when commodity and oil costs began to retreat.
Prices of some inputs have yet to return to the pre-pandemic levels of 2019, while food manufacturers say they have yet to fully recover the higher costs through pricing, while some are locked into more expensive hedging contracts for commodities and packaging. Nestlé, for instance, indicated on 27 July sugar and cocoa prices are 35% more costly than last year’s average.
“We find no clear evidence of profiteering and consider the accusations unreasonable,” Warren Ackerman, the head of Barclays’ European consumer staples team, concluded in support of food producers and grocery retailers in a lengthy analysis published on 4 July...
“Claims of profiteering seem particularly focused on the UK food retailers, but our analysis shows that Tesco, Sainsbury and M&S have seen little or no absolute profit growth and have actually seen significant margin erosion between 2019 and 2022,” they wrote.
Unite’s own research, revealed in a 28 March report, pointed to a 97% combined increase in profits for Tesco, Sainsbury and Asda in 2021 to £3.2bn ($4.1bn), “nearly double pre-pandemic levels”.
Nevertheless, the CMA’s review of Tesco, Asda, Morrisons and Sainsbury, as well as the discounters Aldi and Lidl, found operating profits fell 41.5% on average across those businesses, albeit for 2022-23. And operating profit margins dropped from 3.2% to 1.8%.
Are the accusations of profiteering merely a symptom of misunderstanding or even just flippant remarks?
“I think it’s much more serious and sinister than that,” Clive Black, a director at UK investment company Shore Capital, says. “There are single-issue people that want to challenge the market economy and there are stupid people who just come out with nonsense.
“I think there is a total utter intellectual incapability on behalf of a lot of people. It’s not a nice thing to say, it’s not something that one wants to say, but it’s a reality.”
People who accuse businesses of profiteering might want to consider their own culpability. Did they do what was necessary to eliminate the virus? Did they do anything to reduce their fossil fuel usage?