The Irish government is said to be instigating a risk assessment of the food industry following the news yesterday that 'big four' UK supermarkets Sainsbury's and Asda are to merge.
According to the Irish Times newspaper, Bord Bia - the Irish food board - plans to conduct a "comprehensive risk assessment" amid fears that local suppliers will be hit in the pocket by the deal.
Many of Ireland's largest food producers - such as Kerry Foods, Glanbia and Greencore - are major suppliers to the big UK supermarkets and as such are seen as at risk from any pressure put on their margins after the deal completes.
Agreed Terms
In a statement UK supermarket giant Sainsbury’s has confirmed that it has agreed to terms for a £12 (€13.6) billion merger with Walmart-owned Asda, another leading UK retailer.
The merger, between the UK’s number two and three supermarkets, was agreed upon by the two companies but awaits approval from the Competition and Markets Authority (CMA) in order to be finalised.
Price Squeeze
Many analysts reportedly suggested that that means suppliers will be squeezed on price and investors appeared to agree as a number of major suppliers saw their share prices fall on the news.
According to the Irish Times, Bord Bia said its London office had been contacted throughout the day by Irish suppliers affected by the merger.
The agency said it plans to develop a comprehensive risk and opportunity analysis report on behalf of the industry.
"We believe each Irish exporter affected by today's announcement will require bespoke advice as no two situations will be the same," a spokesperson told the newspaper..
"Bord Bia will work with each company to mitigate any potential risk and explore all potential opportunities."
According to the newspaper both Asda and Sainsbury's source between £50 million and £300 million from suppliers and producers in the Republic of Ireland and Northern Ireland each year.
'More Compelling And Competive'
The combination expects to lower prices by 10% on products that customers purchase regularly.
Following yesterdays announcement Roger Burnley, chief executive Officer of Asda, said, “The combination of Asda and Sainsbury's into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice.
"Asda will continue to be Asda, but by coming together with Sainsbury's, supported by Walmart, we can further accelerate our existing strategy and make our offer even more compelling and competitive.”
© 2018 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click subscribe to sign up for the Checkout print edition.
