A round-up of supermarket news and gossip
BRITAIN faces soaring food prices, a shortage of staple foods and declining public health if the Government pushes ahead with plans to promote the use of bio-fuels, the UK’s biggest food producer has warned. Unilever fears that Europe-wide plans for a huge increase in the use of vegetable oils, such as rape seed and palm oil, in the manufacture of road fuels will have dramatic consequences, driving up the cost of foods such as margarine and leading customers to switch to less healthy animal fats. Huge efforts are being made to promote biodiesel amid concern over the rising cost of oil and reliance on the Middle East for supplies.

Ahold could be broken up after two activist investors put pressure on the £7.4bn Dutch conglomerate to sell off its American businesses.

Ahold generates about E7.6bn of its total E10.5bn sales in America, where it owns the Stop & Shop, Giant and Tops supermarkets. Tesco is set to add Las Vegas to its list of American expansion sites and is set to become Britain’s largest non-food retailer by the end of the year as it expands its markets with bigger stores and the Internet, according to a report by Verdict, the retail analyst.

Analysts have lifted profit forecast for Wm Morrison for the first time since the supermarket chain bought Safeway in a £3.5bn deal in March 2004.

Sales at Waitrose were reported to be down by 1.4% on previous week, but still 11% up on the same week of 2005. Asda admitted that competitive pressure had forced it to cut its margins to boost sales during the summer grocery boom. The parent company reported that underlying sales had risen by about 2% in the three months to the end of July. However analyst said that Asda was not performing as well as rivals such as Morrison, which recorded a 6.1% rise in underlying sales in nine weeks to the end of July. Globally, Wal-Mart reported that profits had slumped 26% over the quarter, the first fall for more than ten years. The fall was largely the result of the £456m loss on the sale of the German business.

Private equity firms are preparing a £6.4bn bid for Coles Myer supermarket chain in a deal that could become one of the biggest in Australia’s history.

It was stated that retailers have become so big, and their supply chains so complex, that trade mergers and takeovers are becoming unattractive, as Wal-Mart’s recent difficulties in Germany and South Korea, as well as Morrison’s complicated merger with Safeway demonstrate. This is likely to mean that supermarket retailers will have to concentrate on organic growth in the future.

Colin Graves, chairman of Costcutter said a £200m merger with Nisa’-Today’s, its fellow buying and distribution group, would mean lower prices for the convenience stores they supply.

Tesco aims to cut the four billion plastic bags it dishes out annually by a quarter within two years. It will award Clubcard points to people who recycle bags.

Metro Group, the world’s third-largest retailer, operates in 30 countries including the UK, where it owns the Makro cash and carry business. Founded ten years ago through the merger of three retail businesses, Metro now claims sales worldwide of £38bn, two thirds of which comes from outside Germany. Metro, which is listed on the German stock exchange, has seen growth slowing. Last year Metro opened a Real hypermarket in Moscow and made its first venture into China in 1996 and now has 29 stores in that country. In Germany the customer is always wrong.

If Wal-Mart thought that it could adapt America’s shop-‘til-you-drop ethos at its Teutonic outlets, it had not reckoned with some of the most draconian shopping rules on the planet. The Ladenschlussgesetz or store closing law is a sacred cow for unions. It means that most shops have to shut by 6pm on a weekday, 4pm on Saturdays and closed on Sunday.

Gemini