Minister Fahy Updates On 10% Grocery Discount
Minister of Home Affairs Michael Fahy provided an update on the Wednesday 10% discount initiative at grocery stores, saying that the “success of the initiative far exceeded the projected usage anticipated by the participating grocers who have taken a significant revenue loss over that which was projected.”
The Minister said the grocers “have indicated that this initiative as it presently stands cannot be sustained after November 30th, 2014.”
Speaking in the Senate today [June 18], Minister Fahy said, “I am happy to report the second quarter findings of the Consumer Affairs weekly monitoring of food prices by supermarkets who have been participating in the Wednesday 10% discount initiative.
“The 10% discount initiative by the larger grocery stores which commenced on December 4th 2013 for a period of one year. As a reminder, three supermarket chains taking part are Lindo’s, Supermart and Marketplace.
“Not surprisingly, once the public were informed of this initiative, speculation began as to how the supermarkets would recover the increased discount – with many consumers assuming that the grocers would increase their prices in order to accommodate the 10% discount,” continued Minister Fahy.
“In response to this speculation, the then Attorney-General and Minister for Legal Affairs, who had responsibility for Consumer Affairs, instructed Consumer Affairs to monitor the supermarkets for price increases over a prescribed period and report their findings at the end of this exercise.
“It was during a six month monitoring period that Consumer Affairs reported they did not find any evidence to support this speculation.
“The primary objective of the 10% initiative was to provide those in need a greater food price deduction to assist them through their time of financial need. The success of the initiative far exceeded the projected usage anticipated by the participating grocers who have taken a significant revenue loss over that which was projected.
“Previously Saturdays was the grocer’s busiest day with a steady flow of customers throughout the week; however since the introduction of 10% Wednesdays the weekly flow of customers has diminished considerably which has contributed to their bottom line losses. The grocers have indicated that this initiative as it presently stands cannot be sustained after November 30th, 2014.
The Minister added, “I would like to say that the Ministry’s findings during this initiative have confirmed the need for it to be continued in another more controlled format that creates an equitable exchange between stakeholders.
“There are some details going forward that need to be worked out – however, the Ministry is certain that it can develop the objective of this initiative into a more sustainable venture going forward.
“To this end, I have committed to meeting with grocers and importers to discuss how and what we can do to assist the people of Bermuda and grocers to make this a win/win moving forward.”
The Minister’s full statement follows below:
Madam President, you may recall on February 19th of this year, I provided my Senate Colleagues with some of the findings of a Price Monitoring Report that was conducted in the Grocery Stores by Consumer Affairs within my Ministry.
This Report was presented to the Economic Tripartite Committee, which includes a number of key stakeholders including the Trade Union Congress. And with my permission, I asked Consumer Affairs to share the contents of the Report with their respective memberships as well as post the Report on the Consumers Affairs website.
Madam President, today I am happy to report the second quarter findings of the Consumer Affairs weekly monitoring of food prices by supermarkets who have been participating in the Wednesday 10% discount initiative.
Senate Colleagues will be aware of the 10% discount initiative by the larger grocery stores which commenced on December 4th 2013 for a period of one year. As a reminder, three supermarket chains taking part are Lindo’s, Supermart and Marketplace. I would like to take this opportunity to thank them at this time.
Madam President, not surprisingly, once the public were informed of this initiative, speculation began as to how the supermarkets would recover the increased discount – with many consumers assuming that the grocers would increase their prices in order to accommodate the 10% discount.
In response to this speculation, the then Attorney-General and Minister for Legal Affairs, who had responsibility for Consumer Affairs, instructed Consumer Affairs to monitor the supermarkets for price increases over a prescribed period and report their findings at the end of this exercise.
Madam President, it was during a six month monitoring period that Consumer Affairs reported they did not find any evidence to support this speculation.
Notwithstanding, it should be noted that during this last quarter Consumer Affairs did observe increases that were predicted earlier in the year by the World Food Price Index. The increases were due to the global weather extremes around the world that devastated crops, livestock and increased the cost of bio fuel. These increases were seen mostly in meat prices, dairy, fruits and vegetables and cereal products.
The largest increases were seen in cereal products or those products that contain cereal byproducts with fruit and vegetables providing the second highest increase due to our demand for these products all year around instead of waiting until they are in season. But these increases should come as no surprise as they were predicted by Consumer Affairs which I mentioned in my Ministerial Statement in February.
New facts released on June 4th 2014 as reported by MSN Money On-line articles entitled, “10 tips for grocery shopping on a budget”, “The USDA CPI summary for 2014 food prices” and “5 states running out of water” also support Consumer Affairs above predictions.
Madam President, as a reminder, the primary objective of the 10% initiative was to provide those in need a greater food price deduction to assist them through their time of financial need. The success of the initiative far exceeded the projected usage anticipated by the participating grocers who have taken a significant revenue loss over that which was projected.
Previously Saturdays was the grocer’s busiest day with a steady flow of customers throughout the week; however since the introduction of 10% Wednesdays the weekly flow of customers has diminished considerably which has contributed to their bottom line losses. The grocers have indicated that this initiative as it presently stands cannot be sustained after November 30th, 2014.
Madam President, the success of this initiative speaks to the need and to the willingness of local business to assist – however to leverage and sustain this success Government and the stakeholders need to take into consideration four core issues:
1. How to narrow the scope so that only those in real need continue to benefit from this initiative which in turn will address the bottom line concerns of the grocers. And to this end, there are major concerns not to be overlooked when doing this.
The public reaction to the completion of the initiative,
The public reaction to how you would narrow the scope thus excluding their rights to the initiative,
How to narrow the scope without putting added administrative workload to Government Helping Agencies such as Financial Assistance; and,
Expanding the initiative into other grocers when they know their bottom line will result in lost revenue.
2. Evaluate the products within the Staple Food Basket that the Department of Statistics uses as their guideline for the CPI. This should be done in partnership with the local markets as the basket does not accurately reflect the Bermuda family shopper.
3. Education is a key component as local food shoppers are greatly disadvantaged due to their lack of knowledge in the following areas:
The effect that the Global Market has on our prices. If the consumer can understand the effect of extreme weather on worldwide crops, the cost of fuel etc. they would be able to predict increased food prices months in advance. This would go a long way in dispelling the mistrust consumers have with grocers.
To understand their demands for items cause fluctuation in prices – especially when they are not in season and have to be shipped in from places like Israel, Morocco etc.
To encourage shop smart consumers need to understand the tricks of the industry i.e. net weight and packaging. Two examples:
i. A Skippy peanut butter jar looks the same but if you look at the net weight you are actually getting less product for the same price, by turning the jar over you will notice an indent at the bottom creating a decrease in product volume.
ii. Canned vegetables; a common mistake consumers make is to assume that the listed can weight is the weight of the food product but in fact it includes the water. The food content is anywhere from 52% to 66% of the overall weight of the product on sale.
4. And lastly, dialog with Environmental Protection to explore avenues that will benefit both the local farmer and the consumer.
Madam President, as I conclude I would like to say that the Ministry’s findings during this initiative have confirmed the need for it to be continued in another more controlled format that creates an equitable exchange between stakeholders.
As indicated earlier in my Statement, there are some details going forward that need to be worked out – however, the Ministry is certain that it can develop the objective of this initiative into a more sustainable venture going forward.
To this end, I have committed to meeting with grocers and importers to discuss how and what we can do to assist the people of Bermuda and grocers to make this a win/win moving forward.
Thank you Madam President.
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What a load of Caca!
The grocers have been reaping substantial profits on the backs of the underclass for decades. I don’t believe for a minute that they are suffering as much as they claim to be from a one day a week 10% discount offering.
Once again the rich continue to richer!
And politricktions are making $100,000+ as their side hustle!!!!!!!!!!!!!
Biko – Actually missing $800,100,000. Let’s find it all.
Feel free to open your own grocery store and compete with these ‘greedy merchants’ who are ‘reaping substantial profits on the backs of the underclass’. There’s a prime building in Warwick that’s ready made for a grocery store and with your lower prices and superior business acumen I’m sure you too, will be reaping substantial profits in no time.
Fact is the pre-tax profit margin “enjoyed” by US grocery chains is generally significantly less than 5% so I’ve always found it amazing (amusing?) that grocery stores could allow a 5% discount even if it’s only for one day a week.
Up that to ten percent and, even in Bermuda, they’ve got to be losing money that day.
Except in Bermuda it is well over 20% on most items
I agree with Infidelguy _ this is a load of nonsense. Why just today, my husband commented how apples have increased in price since this initiative started. They used to be 99cents, to $1.29, then $1.39 and now this week, $1.49 at Market Place. This is just one item. I’m not sure what they were monitoring but clearly someone can’t do math very well.
bullcrap. they have been raising their prices. anybody thinks otherwise better look again.
Lindos remains about 20% higher priced than their competitors, particularly Marketplace. Nice new refrigerated display cases there today when I was shopping for my 10% off. I’m sure they can suck it up to offer people a break.
I find Lindos has the same if not lower prices than Marketplace. And far better quality of goods provided. Marketplace prices ShopRite goods at prices HIGHER than the actual brands! ShopRite is supposed to be a DISCOUNT brand, like Equate from Wal-Mart.
Marketplace is the price gouger. As soon as they notice that consumers like a product, they increase the price of that product. How they sleep at night, I don’t know. Maybe the large amounts of cash under their pillows help.
@Tough Love
It’s called Capitalism. They continue to “tweak” the price until they find the limit that the market will bear. It is not unique to Bermuda.
The purpose of a business is to maximise profit. People don’t create businesses to lose money or break even. They are created to increase the wealth of the investors. If you want to operate at cost (zero profit) then you create a charity and provide your services at cost.
As was mentioned above, there are two old Whites locations and the old Co-Op location. If people want to create some at cost competition then lets ban together and sort out one of these locations as a charity supermarket and provide goods at cost. It could start with non-perishables of limited brands and slowly grow to include perishable items (starting with local farmers’ crops). Price it all at cost.
Ride
No one is saying that they can’t make a profit. I don’t recall Publix doing this so blatantly and aggressively, but maybe because the American market wouldn’t allow that. I’m just noting how the shared sacrifice has not been made by the grocers.
If they were Louis Vuttion or Prada, I would understand, but because we all need food to survive, this is where price “tweaking” begins to become unethical, IMHO.
But I like your idea of us (you included) coming together to do something. Looking forward to hearing how we all can help one another.
Stop this smoke screen nonsense. The 10% on Wednesdays is a farce. The stores mark up the prices every Wednesday so it’s like we only getting 5%. Do the right thing and ensure that the stores do not mark up prices
They are definitely not suffering and the prices have been steadily climbing. The price of quinoa used to be $7 and now it is $10; so you can’t tell me the prices haven’t increased! And let’s not even talk about the price of cereal!!
Direct quote from the press release. “The increases were due to the global weather extremes around the world that devastated crops, livestock and increased the cost of bio fuel. These increases were seen mostly in meat prices, dairy, fruits and vegetables and cereal products.”
Stop it now. ‘Real’ Bermudians don’t let facts get in the way of a good rant.
I agree 100%, but don’t you find it funny that we in Bermuda conveniently use the global events only when it suits our best interests? Nothing to do with the article, but the element in this does fit the bill. Example, world-wide known fact is that the majority of the planet was experiencing an economic depression during the final years of PLP’s reign, but we don’t acknowledge that because it just suits us to blame them (PLP) for every and every single thing that went wrong during their leadership.
polly, ever heard of a little thing called inflation? And ever considered that things like weather and fuel prices impact the cost of goods (in Bermuda as well as the rest of the world)?
And prices are going to head up again as fuel prices increase. Of course if you want to believe that increase in fuel prices resulting from the situation in Iraq is the direct result of the local grocery stores wanting to increase prices, feel free. But, in the meantime, hang on to your hat.
Inflation is supposed to be a gradual increase, like 3 -5%. a price increase from $7 to $10 is a 43% INCREASE! I understand their are other factors like fuel and crop shortages, but my word, there is something wrong with that math!
I think you do not understand inflation. Clearly you missed the 70′s.
Normal inflation acts that way. But since you think you know better enlighten me, with facts of course.
Since you requested facts, food and non alcoholic beverages in the US increased 8.8% year on year as of May 2014. If you exclude beverages, it was 9.1% year on year. This is far above your “3-5% range”.
So, without even considering fuel costs (and oil prices spiked 4% since early June, just the last few weeks ago), we would expect to see rising prices in our supermarkets.
But don’t take my word for it. Feel free to do your own research.
You are comparing 15% to 43%? And 9 isn’t that far from 5, when compared to 43%. I fail to see how 43% is justified as a price increase when you haven’t presented more than reasons for a 15% increase, and lets add 5% (profit margin est.) and you have 20%. (NB: the profit margin estimate is a generous one for grocers, since normally they average about 2% at best).
Justify how a 43% increase in price is “just inflation” and not greed.
Sigh. Honestly, I don’t mind defending myself, but perhaps it would help if you did a teensy bit of research:
- Quinoa prices rose 86% in Peru in 2013 (it’s grown in Bolivia and Peru).
- Global demand skyrockets price of Quinoa (2013) Prices tripled over last 6 years (2007 – 2013)
- numerous articles on why quinoa is now out of reach of poor consumers, and lack of supply.
Anything else?
Damn don’t those greedy farmers in Peru know they’re hurting all us hard working Bermudians. How dare they raise prices like that.
Hyper inflation, which is what it sounds like you’re describing is not supposed to reoccur year after year on a regular basis.
But tell me again, how I don’t understand inflation, cause clearly my econ and finance professors were wrong.
(1) What you said was that inflation “is supposed to be a gradual increase”. Why? Are we experiencing normal conditions? Do you think the inflation we are seeing is caused by demand (i.e. more demand than supply) or cost/profit inflation (rising costs equal higher prices to maintain profit margin? What economic policies does Bermuda have to control inflation? Oh that’s right, like, none. Out of the two main economic models to control inflation (fiscal and monetary actions), Bermuda only has the option of fiscal methods, i.e. government spending. Of the other policies to control inflation, one of which is wage control, I doubt you would find many supporters in Bermuda.
(2) I believe there are two primary causes to the current rising prices: global food shortages (google this, you can find an article almost daily, and this article references it above). Last month, fruit and vegs in the US rose 1.1% (May 2014). Fuel has increased as well. Thus, I believe this is demand related inflation. Why do you believe that should result in ‘steady’ increases when there is clearly not enough goods?
I hope that provides you with sufficient edification.
Again, I ask that you justify the 43% increase. Yes we have fuel increases and price increases on the food/produce brought in, but that doesn’t almost double the cost of an item.
I’m not suggesting that the shortage would produce steady increases in inflation, but even with a 1% increase each month, that leaves us with far les than a 43% increase.
My point is that yes, we the consumers understand that prices have increased, but we also know that grocers haven’t adjusted their bottom line to account for the increases. They just pass the costs onto us, hence a 43% increase in price in the Quinoa as a prime example. There’s not enough justification without actually seeing the numbers from the grocers themselves. But somehow I doubt that even if we were allowed a peak at their financials, that we would find justification for such an increase, other than to keep executive salaries where they are and climbing.
See my response above.
Grocers are in it to make money for their investors. Whilst they might be willing to see a small decline in their profit margin, clearly this was more than they were expecting.
The proof is in the market. If the profit margin is as large as you say, we would see increased competition. The fact that several grocery stores have gone out of business in the past few years speaks volumes – margins are not what you think.
After all, anyone can open a grocery store. If it’s the money maker you think it is, I’d recommend you look into it.
Backing down on a commitment to the people of Bermuda? What a shocker!
No they’re not. Read the article.
Another direct quote from the press release. “To this end, I have committed to meeting with grocers and importers to discuss how and what we can do to assist the people of Bermuda and grocers to make this a win/win moving forward.”
What discount????????
Can’t even get a loaf of bread, a container of milk, or a stick of butter for a decent price! Expensive on the 10% off day and Robbery the other 6 day’s!!
Go open your own grocery store, if theprices are too high, then surely you can undercut the existing stores and make decent money, e aue youll be cheaper and customers will flock to your store………if it is that easy go do it. Just sayin.
“grocers who have taken a significant revenue loss over that which was projected.”
For the sake of being in a new “era” of transparency, please provide numbers to support, what most people believe to be an inaccurate statement.
Sounds like you should open your own grocery store. After all, if that statement is inaccurate you should be able to undercut the competition and rake in the dollars. What more could you ask for?
I’ve notice from the time this was granted to us last year. That the prices jumped immediately. So we really not getting a discount. These stores no what they are doing. 6days prices are sky high… 1 day discount… Please… I picked up a bag of Oranges and it was $15.00 are these people gone if their cotton pickin minds
The prices go up every week. The higher prices are put on top of the old ones . Believe me the grocers are not suffering . They are making a killing so they are not fooling us with their so called 10 per cent discount . Some cereals are now over $9 . How can a family afford to pay that to feed their children and $3.89 for a dozen eggs .
Nope, some cereals are over 10 bucks now!!
OOO I feel so sad that the grocery stores are no longer making 300% profit and now they are only making 295% profit….o boo hoo hoo.
So glad Robin Hood Fahy is here to the rescue…or am I mixing up the story….
More like Hood Robin Fahy…robs the poor to feed the rich
These grocers continued to make major dollars during the recession it seemed that the prices went higher and higher and now they are whining that they can’t continue with this initiative after November…..I wish someone would do their own private assessment of the price changes around the discount days!
Drop the duty on food AND Implement price control .
Bermuda food bill is double that of the US
GOVERNMENTS CAN MAKE OR BREAK A NATION .
Dropping the duty on food is one thing (I’m too lazy to look it up but I believe a lot of it is already duty free) but price controls are a different matter.
Local grocery stores purchase their goods from suppliers in the US and those entities will charge whatever they need to meet their profit targets. That means that wholesale prices will continue to go up. If you read the article you’d have seen this comment re prices:
“The increases were due to the global weather extremes around the world that devastated crops, livestock and increased the cost of bio fuel. These increases were seen mostly in meat prices, dairy, fruits and vegetables and cereal products.”
And don’t forget that shipping costs are going to continue increasing as fuel prices continue to increase – that is, unless you believe that the Bermuda government can institute price controls that apply to OPEC or they have the power to tell the Iraqi’s to behave and stop driving the price of oil up.
UNIONS CAN BREAK OR MAKE A NATION.
Just go ask the Brits ,that cost them an EMPIRE
What does this have to do with the article?!? Focus!
To those that feel that are okay with what grocery store charge and who choose to defend the cost of goods and increases I have a list of parents that are in dire need. Perhaps you can assist them as they struggle to keep up with the WEEKLY increases on food items as they strive to feed their families….You all must realize that if YOU are okay with the price of goods don’t put down others who don’t feel the same way….You take a drive across any grocery store on any given day and there are ALWAYS cars in the parking lot…Even if the individual only spends $5 that is $5 more than what the grocer had the day before. If we were to all STOP shopping than what…but they know that we won’t as we NEED food and that’s why they continue to mark things up because they know we will buy it. I wiah we could all band together for just one day and don’t go into the stores at all to let them feel what it WOULD be like to make no money…I bet they would change their tune then….
Exactly.
If you can, please share how people can donate to these families.
Should read..”To those that are okay……
I hope Minister Fahy remembers to revoke the sale of liqour on Sundays when the discount is pulled back. Wasn’t that part of the deal? The stores cant have it both ways.
10 percent fewer people on the island and 10% discount spells trouble even if they raise prices before the discount…….too many markets for too few people???same with healthcare fewer healthy people leaving the older folks behind…..long process to get more people back to the island
I think that the grocers agreed to give the 10% as a concession for Sunday alcohol sales but not only was that an expensive concession it was met with negative response from the public. Why would they extend the 10% out longer then they had to?
“The primary objective of the ten percent discount was to provide those in need a greater food price reduction to assist them through their time of financial need,” he said.
The whole island is taking a hit Mr. Fahy…those in need are ALL OF US!!!!!!!!!!!!
And my need for the discount is not going to end come December of this year.
As a matter of fact , it’s probably never going to end .
I don’t understand how they are losing money if ALL of the prices have been marked up before the “discount day”…. Come on ‘grocery stores’ we are not stupid… I don’t think grocers’ are suffering, they’re just not making “as much” of a profit, but in this economy any profit should be a blessing…. greedy!
I bet they take away that 10% discount but keep the Sunday Liquor permit. How much money are they making on that alone??? You take back the 10% then gov’t needs to revoke that Sunday Liquor Permit.
People are struggling as it is! In the states they wouldn’t be having all of this nonsense!!!
People are being way to passive on this island I don’t think they take anyone into consideration at all these governments do what they want. The grocery stores are in cahoots to!
NOBODY SHOP IN THE SHOPS FOR LUNCH HOUR THEN WHAT WILL THEY ALL DO?!!!!!!
DOWN WITH SYSTEM!!!
The grocery stores are greedy and make lots of profits! If they take the 10% away I urge all Bermudians to only buy essential goods like bread, milk etc. Stop buying junk food, alcohol, cigarettes and all the goods you don’t need. We the consumer have the power to make change! Everyone needs to help those persons out of work and all those who are already sacrificing through work furloughs etc.
As I read these comments I smiled. The grocery chains wanted to sell liquor on Sundays . . .the government of the day had to find a way to make it fly (those are their supporters) . . .hence let’s give the common man this 10% discount day and make it look like we really care, and then that way you can have your Sunday Liquor license without any backlash!!!!
There is a simple solution to this for us as a people . . .boycott!!! If families got together and bough in containers of their own essential most expensive items, the grocers would be forced to amend their prices.
There is no way that grocers who are buying in bulk, should have a 300% markup on goods compared to retailers in the states who are also still getting a profit off the prices we see. Case in point, a 12 pack of Pepsi retailing for $12.99 when its $3.00 in the US!!!!
The marketplace has been making extreme profit for years now, to the pint that they have added the lunch are in their Hamilton store as did Supermart, cutting the throats of other restaurants in the area. They have the largest chain of stores, two in one parish, but a stone throw away from each other, so clearly they have profited.
Yes, the discount maybe be affecting them . . .they just are not making as big of a profit as they were used to making. Plain and Simple!!!
Can someone please explain to me how Local eggs have to be as expensive as imported eggs. Does the Dunkley family have to import the chickens??????
I will try and help explain some of this phenomenon. It is abundantly clear from many of these posts the many people do not have an understanding of economics.
The reasons why local eggs are expensive as imported eggs are very simple. (1) Labour! The costs of having local labour in Bermuda is very high in comparison to other countries. The average farm worker salary in the US is under $20,000.(2) Economies of scale. Larger production facilities makes individual items cost less. The farms in Bermuda are very small as they serve a tiny market. Thus, costs per unit are much higher.(3) Electricity. All farms require electricity and fuel, and we pay some of the highest amounts in the world. Again, production costs are far higher. Thus, a large scale producer can produce the eggs much more cheaply, and even with shipping can be competitive with a local, small scale provider.
That being said, it is good to support local businesses.
How much duty is paid for food items? Maybe the Government can reduce this cost. This could be an option or lower government taxes associated with Grocers?
The tariff is online; look it up yourself. Most of the basic necessities are either already duty free, or subject to 5% duty.
Items of a more extravagant nature are subject to the normal 22.25% duty.
If they ‘lower the taxes on grocers’ do you mind if they raise your taxes to make up the shortfall?
The quid pro quo was sunday alcohol sales.
Keep the 10% discount for Senior Citizens
Good idea. At least that way some families will actually visit their Grannies and take them for a day out to the grocery store on Wednesday.
My, what a lot of groceries you have today Granny.
Seniors can certainly do with the help but families with young children also need help. The one thing I notice while shopping is that people pile their carts up with junk food . Young children do not need all those potato chips, sodas and candies and cookies and fast foods. Mothers should be making nourishing casseroles and soups and baking their own cookies . That way you will save a lot on your grocery bill.
This is a load of crap. This is one day a week that we are able to get a 10% discount if you can call it that because some prices have been marked up.