Monday 17 December 2012

Loss (of brain) leading

Call Me Dave has recently made the claim that supermarkets are subsidising alcohol sales at the expense of wholesome food by selling alcohol cheaply, or even at a loss.

This has been vigorously debunked by Tim Worstall and by Legiron. Amongst the points they make are:

  • Supermarkets don’t make profits by selling any significant proportion of goods at a loss
  • Most discounts are in any case funded by manufacturers rather than retailers
  • Supermarkets will only make money by subsidising one part of a customer’s basket at the expense of other parts. They won’t make money by subsidising some customers at the expense of others
  • Supermarkets are in general cheaper than other retailers, even those who don’t sell alcohol, across the whole range of goods
Cameron’s comment that “there are some supermarkets that discount tins of high-strength lager down to, you know, 25-30p” is completely untrue and just shows how out-of-touch he is. In reality, you would struggle to get one below £1.50.

And I love this comment from Legiron:

It’s simple. If any shop is making a consistent loss on a product line, they stop selling it. That’s why the beer selection changes – if it’s not popular, it doesn’t get re-stocked. No shop anywhere is going to put up the price of their standard fare (McEwan’s Export in these parts) to subsidise the loss-making craft beer known as Jock McSquirty’s Bowel Purger.
To be honest, all this really proves is how disconnected Dave is from the ordinary voter.


  1. Much of the minimum price debate is built on lies and misinformation. Call me Dave is an arse, what is Mike Benners excuse?

  2. This and gay marriage are this Govts. icons. As with the previous one and smoking so with this one with these two things. There's nothing else that can catch the eye for him to be remembered. Absolutely nothing.

    Scraping barrels doesn't cover it.

  3. Supermarkets do sell alcohol at a loss though. My local Sainsbury is currently offering 30 cans of various lagers for £18. There's £3 VAT on that, then the 51p/can duty, which adds up to more than the selling price before we even begin to add in the cost of the actual product.

  4. Doing the maths, the duty on a 440ml can of Stella at 4.8% is 41.2p. Adding on 20% VAT brings it to 49.4p. 30 cans for £18 is 60p a can, so there is still some margin there, albeit not very much.

  5. I suspect the 51p figure comes from the duty and VAT on a 440ml can at 5%.

  6. With milk you have a product that deteriorates. Supermarkets figured out long ago that cheap milk encourages top up shopping in between big shops and have been accused of loss leading it. Cheap supermarket milk has done for the milk man.

    A couple of pence on a pint of milk is no big deal if most punters pick up a tenners worth of other stuff.

    There is no logic to loss leading products through bulk buying things that last a year.

    If you think it is going on, though, I reckon xmas is the best time to look. With the xmas shop being 2 or 3 times the size of a regular shop, why not give away a cheap bottle of champagne at a loss?

    The thing is, what might be sold at a loss isn't necessarily the cheap piss. It might be worth while flogging a £30 bottle of single malt for £20, if you get the big xmas shop of a large extended family.


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