The UK’s biggest supermarket has started its price war by cutting the cost of 3,000 products as part of a £500m campaign.
Some 14,000 staff across the UK changed nearly three million labels over the weekend on items such as milk, bread, and fruit and vegetables.
Tesco, which has lost market share in recent weeks as cash-strapped consumers shop around for the best deals, will cover the price cuts by slashing the number of multi-buy promotions and scrapping its double Clubcard points reward offer, meaning the scheme will revert to one point for every pound spent.
However the National Farmers’ Union (NFU) responded to comments from Tesco UK chief executive Richard Brasher, who said he expects suppliers to “come to the table” for discussions on shouldering the cuts.
Mr Brasher believes Tesco’s supply chain will benefit from the cuts because of an increase in volumes.
But Thomas Hind, NFU director of corporate affairs, said: “Our main concern is about the prices farmers receive for their products rather than retail prices but experience tells us that retailers often expect their suppliers to ‘share the pain’ of any cut in retail pricing.
“This would be unacceptable in the current climate when farmers and manufacturers are facing massive cost pressures.”
Richard Brasher, Tesco’s UK chief executive, said: “We’re giving customers a more straightforward shop – reducing the number of promotions and putting the emphasis on clear and reliable savings that everyone can benefit from.”
A typical price cut would include loose carrots, which will be reduced by 14p per kilo, which Mr Brasher said would save 747,000 households around £5.4m a year.
Elsewhere, a medium sliced white loaf will be cut from 69p to 55p, a pack of Braeburn apples will be down to £1.40 from £1.75, a bag of maris piper potatoes will drop to £1.39 from £1.74 and an Italian pepperoni pizza will slip from £3.59 to £2.85.
Tesco has had a fraught relationship with some of the farmers it uses to source its products.
Around 70 pig farmers and supporters of the industry gathered on a picket line outside the Tesco AGM in July in a battle to win “a fair price” on their products.
Liberal Democrat president Tim Farron, whose constituency is in rural Cumbria, is a vocal critic of the major retailers’ treatment of the farms that supply their produce.
Mr Farron earlier this month admitted feeling “uncomfortable” that his party’s conference included supermarket giants Asda and Tesco as sponsors.