Report on the
Monitoring of Food
Prices in Bermuda
on 10% Wednesdays
Report prepared by Rhonda Daniels
Feb 2014
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1.
Background
The cost of food has always been a source of discussion and complaint both here in
Bermuda and worldwide. However in these severely restrained economic times, food
prices have continued to rise significantly over the years. Thus it is becoming increasingly
difficult for consumers to feed their families.
In an effort to help relieve the burden of putting food on the table, Government and the
grocers came to an agreement that for one year, starting December 4, 2013, Marketplace,
Lindo’s and Supermart would offer 10% discounted shopping on Wednesdays instead of
the usual 5%.
Once the public had been informed of this agreement, speculation began as to the ways in
which the supermarkets would cover the increased discount. Many consumers believed
the grocers would increase the prices in order to accommodate the 10% discount.
In response to this speculation, the Minister for Legal Affairs, The Hon Mark Pettingill JP,
MP, gave a directive to Consumer Affairs to monitor the supermarkets for price increases.
It was decided the monitoring would begin on November 28th, 2013, the week before the
start of the 10% discount day, and continue through to January 31st, 2014.
2.
Method
There are over 21,000 items in most of the stores. As monitoring the prices of all these
items would be next to impossible, the Department of Statistics was consulted regarding
this initiative since they monitor food prices every month to produce the Consumer Price
Index. A copy of the Staples Food Basket list was obtained from them as a tool to use for
monitoring purposes. This food basket consisted of sixty (60) food items listed under the
following ten categories:
1. Bakery Products
2. Cereals and Cereal Products
3. Dairy
4. Meats and Fish
5. Oils and Fats
6. Fruit
7. Vegetables
8. Sugar and Confectionary
Report prepared by Rhonda Daniels
Feb 2014
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9. Prepared Foods and Snacks
10. Non-Alcoholic Beverages
Only brands carried by all stores were monitored. This was to ensure that like products
were compared for price variation and increases.
One Enforcement Officer from
Consumer Affairs monitored eleven stores on the following dates starting at 8:00 a.m. and
finishing at 5:00 p.m.
1. 2013: November 28, December 4, December 11 and December 18
2. 2014: January 8, January 15, January 22 and January 29
Visits were not made on December 25, 2013 and January 1, 2014 as Christmas Day and
New Year’s Day fell on those days.
Initially the average length of visit at each store was sixty minutes as it took time to
determine the layout of each store and the location of the products on the list. Subsequent
visits averaged between 20 and 30 minutes. This depended on how busy each store was
and the availability of parking.
3.
Overall Findings
The cost of the average shopping basket varied from store to store depending on
availability of products on the shopping list. Below is a chart showing the cost of the
shopping basket at each of the main stores.
$280.00
$275.00
$277.74
$270.00
$265.00
$267.88
$265.73
$260.00
$255.00
$250.00
SuperMarket A
Supermarket B
Supermarket C
Report prepared by Rhonda Daniels
Feb 2014
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The reason for the lower cost of the shopping basket at Supermarket A and B is because
not all of the staple basket products were always available. The prices at each supermarket
do not include the grocery specials and the 10% discount.
Prices vary between the supermarkets because local suppliers offered different deals and
discounts to the supermarkets at different times. And while the local suppliers regularly
increased their prices of products supplied to the supermarkets, they in turn struggled to
keep the prices affordable for the consumer. Another reason for price variation is that
there are some products the grocers buy direct from overseas in order to keep prices
competitive.
During the monitoring period, the Enforcement Officer conversed with consumers and
managers. Some consumers made known that the 10% discount did not afford them any
significant savings.
3.1
Bakery Products
The cost of bread in January 2013 was $5.75. It increased by twenty-four cents to $5.99 in
February 2013 and it has remained consistent at that price for almost a year.
3.2
Cereals and Cereal Products
The cost of these products remained consistent throughout the monitoring period until
January 22, 2014 when the cost of a 12 oz box of Kellogg’s Corn Flakes increased by thirty
one cents at Supermarket C.
Not all of Supermarket C’s stores reflected the price change of the Corn Flakes. This was
because the old stock had not been completely sold out in some of the stores.
3.3
Dairy Products
While the cost of dairy products remained consistent during the monitoring period, the
most significant price increase was eggs supplied by a local company.
These eggs usually sold for between $3.39 and $3.99 a dozen. However the price increase
occurred in the New Year. The reason cited for the increased cost was the decreased
availability of brown eggs.
3.4
Fruits and Vegetables
All the stores sold broccoli, pumpkin, lettuce, tomatoes, bananas, apples and oranges for
the same price. There was a slight variation in price from store to store depending on the
size of the produce.
Report prepared by Rhonda Daniels
Feb 2014
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If local produce was available then an embargo on imported produce became in effect.
For instance, at the start of the monitoring, imported bagged carrots were available.
However two weeks before Christmas, local carrots became available for purchase and the
imported carrots were removed.
3.5
Meats and Fish
There were no apparent price increases for these products. Packages of codfish differed
by a dollar between the supermarkets.
The most popular sliced meat at all the stores was turkey, followed by boiled ham.
3.6
Oils and Fats
These prices remained consistent during the monitoring period.
3.7
Sugar and Confectionary
Prices were consistent during the monitoring period.
3.8
Prepared Foods and Snacks
Prices remained consistent during the monitoring period. Some of these products were
offered on the grocery specials.
3.9
Non-alcoholic Beverages
Prices remained consistent during the monitoring period. Certain brands of coffee, tea and
bottled water were offered on the grocery specials.
4.
Grocery Specials
Supermarkets offer weekly product specials. They run from Wednesday to Saturday.
Certain products remained on special from November 27 to December 28, 2013.
The products listed on the food basket list were eggs, butter, evaporated milk, corn flakes,
5 lb bag of frozen chicken parts, peanuts, microwave popcorn, potato chips, tea bags,
coffee, crackers, mayonnaise, canned tuna, canned corn niblets, macaroni, potatoes, and
certain vegetables.
5.
Pricing Inconsistencies
During the two month period of monitoring, it was discovered that some products in
Supermarket C stores were priced differently from store to store. Reasons for this were:
Report prepared by Rhonda Daniels
Feb 2014
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1. If a store had several cases of a product still in stock, that product would be reduced to
sell. Therefore that particular store would have a product on special that the other
stores would not have.
2. Some stores received new stock before others and if there was a price increase, that
new price would be reflected on the products.
3. Human error during pricing. Thus if a product was marked differently from store to
store, it would be brought to the store manager’s attention and the error would be
corrected immediately.
6.
Price Increases
The Supermarkets received noticed that as of February 4, 2014, prices from a local supplier
would be increasing on the products they sell. This means the prices for those products
will have to be adjusted accordingly.
7.
Consumer Perception
From the onset of the 10 % discount announcement, consumers were suspicious that the
grocers would increase prices in order to maintain the discount. Many felt they had
evidence of this and would take to the airwaves, Facebook and even approach the
Enforcement Officer to voice their indignation. Three examples of these incidents are as
follows:
1. A consumer complained on Facebook about apples that used to cost $1.09 per apple
had increased to $1.39.
She felt this was evidence that the supermarkets were
increasing the cost in order to provide the 10% discount.
In actual fact, the apples had increased in cost because they were larger apples. When
apples and other produce are bought it is based on the count. The count is used as a
gauge for the size of the product. For instance if an apple is an 88 count, this means
there are 88 apples to a case. If an apple is a 72 count size, then there are 72 apples to a
case. The weight of a 72 count apple is 9.3 oz and the dimension is 3.29 inches.
Therefore, the bigger the number, the smaller the size of the product.
This also
pertains to other produce such as cauliflower, heads of lettuce, broccoli etc.
2. A consumer, who regularly shops at a west end supermarket, always buys John West
sardines. On the first day of the 10% discounted day, he approached the Enforcement
Officer stating he had proof the stores were marking up prices. The tin of sardines he
usually buys cost $2.19, but on this day they had been marked up to $2.69.
On close inspection, the tin of sardines he complained about was John West sardines
in Peri Peri sauce. When asked if this was the product he usually bought he realized it
Report prepared by Rhonda Daniels
Feb 2014
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was not and that he usually buys plain sardines whose price is $2.19. He did not
apologize to the employee.
3. Supermarket C still uses price stickers for all products. If a product went on the
grocery special, the decreased price would be placed over the original price. Once the
product came off of the grocery special, another price sticker with the original price
would overlay the special price, leading the consumer to believe the price had
increased.
8.
Points to Consider
1. Rising food prices are a global issue and as Bermuda is part of the global economy we
are affected by what happens globally.
2. Consumers need to understand that unusual weather extremes affect harvests
worldwide. For instance, in the United States alone, drought, floods, frosts and fire
affects the productions of crops. When these disasters occur, crops are decimated,
affecting the supply of products which is decreased, which in turn increases the cost.
3. Bermuda imports mostly all of its food supply. These products often come from long
distances. This system is completely dependent on oil. When the price of oil goes up,
so does the cost of shipping. The local suppliers and the supermarkets try to absorb as
much of the cost as possible, but eventually these increases are passed onto the
consumer.
4. Alternative sources of fuel now include biofuels which will help decrease the
dependency on oil. Unfortunately much of the corn that is produced is now used to
manufacture biofuels. This leaves little corn available to feed cows and to make food
products. Little corn, higher demands, higher prices.
5. If the secondary suppliers (local) were to be eliminated, while it may result in
decreased costs for the consumer, it would lead to loss of jobs for Bermudians which
would put an added burden on the economy.
6. The supermarkets regularly have to dispose of spoiled fruits and vegetables and
products that have passed the sell by and best by dates. This in turn affects their profit
margins.
7. Supermarkets have high operating costs such as rent, employee wages and salaries,
electricity, and then the various land tax, payroll tax, social insurance health insurance
etc. The monthly electricity bill for ones tore alone is $68,000. Not all the stores own
the buildings in which they operate.
Report prepared by Rhonda Daniels
Feb 2014
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9.
Conclusion
It must be made clear that this was not an investigation, but rather a monitoring exercise.
The supermarkets were monitored for any significant price increases or evidence that
prices would be hiked in order to recoup 10%. Other than the usual price increase for
certain products, there were no significant increases observed on products listed on the
staple food basket list. It would not be in the grocery stores’ best interest to engage in
potential practices which could breach laws in Bermuda.
10. Recommendations
To ensure there is an understanding of the supermarket industry and how it operates we
recommend the following initiatives be explored and implemented.
1. A joint education campaign between Consumer Affairs and the Grocers Association.
This campaign would provide consumers with basic information about the
Supermarket industry.
2. Consumer Affairs could provide tips that would educate and empower consumers
about their responsibility to voice their concerns to the store managers.
3. Consumer Affairs could provide customer service education to store managers to
ensure they are best equipped to handle customer complaints.