Archived press release

Tesco profits just not cricket

19 September 2005

Competition authorities must take action now to protect consumers and farmers by stopping Tesco's uncontrolled expansion, Friends of the Earth said today, as quarterly results for the supermarket giant are predicted to reveal more profits and greater market share for the company. Tesco now makes more profit in less than five minutes than the average UK farm makes in a year [1].

Tesco controls nearly one third of the UK grocery market, with £1 in every £3 spent on groceries spent at Tesco [2]. They are due to open at least 111 stores this year alone and their share of the convenience store market is rapidly growing, with the possible buy out of 30 old Safeway forecourt stores. Tesco's expansion in to non-food sales threatens livelihoods and jobs in thousands of retail outlets throughout the UK.

Friends of the Earth warned that Tesco's growing market share is bad for British business, bad for consumers, bad for the environment and called on the UK Competition Commission to urgently investigate Tesco's monopoly position. On the high street, some 2,000 independent stores went out of businesses in the last year alone, unable to compete with promotions and planning and taxation policies which favour the multiples over smaller shops [3].

Friends of the Earth believes Tesco must be forced to sell off stores as soon as possible and called for a moratorium on mergers in the retail sector.

Friends of the Earth is also demanding stronger measures to ensure fair play in the supply chain.

Tesco boasts about its commitment to fair trade and "corporate responsibility" in its annual report, but Friends of the Earth has revealed that Tesco's practices are putting many UK farmers out of business and also creating huge problems for workers supplying Tesco overseas.[4]

Friends of the Earth's Food Campaigner Vicki Hird said:

"Tesco's sensational growth is sucking the life out of communities, farmers, workers and the environment. The Competition Authorities should be embarrassed that they have let things get this far and must now act to curb the local and national monopoly of Tesco.Tony Blair promised to tackle the `armlock' farmers are in with supermarkets five years ago. He has failed as the Code of Practice is a damp squib, which must be strengthened urgently. "

The new Tescopoly campaign website [www.tescopoly.org] provides evidence from a range of public interest groups that show just how much of a problem Tesco is and how local communities around the UK are fighting back.

More information

Full background briefing on www.foe.co.uk/resource/briefings/the_tesco_takeover.pdf

Friends of the Earth's briefings on supermarkets and the environment:
www.foe.co.uk/resource/briefings/checking_out_the_environme.pdf
www.foe.co.uk/resource/briefings/good_neighbours_community.pdf

Notes

[1] Tesco Group profits in 2005 were £2,029 million which equals £3,860 per minute. Average UK farm income in 2005 was £17,500. (www.defra.gov.uk).

[2] The last survey showed that Tesco had 30.7% of the market (The Grocer Tradetrak, August 27). The August IGD Grocery Retailing Report revealed that Tesco has a turnover 82% higher than any other supermarket.

[3] See www.foe.co.uk/resource/briefings/the_tesco_takeover.pdf

[4] Farmers identified the following abusive trading practices in a 2003 survey conducted by Friends of the Earth: `being asked to pay a rebate on an agreed price, waiting over 30 days for an invoice to be paid, incurring additional transport or packaging costs due to changes in supermarket specifications and meeting the costs of unsold or wasted products where quality of the product was not an issue'.

According to the Competition Commission Report (2000) the buying power of the major supermarkets actually means that `the burden of cost increases in the supply chain has fallen disproportionately heavily on small suppliers such as farmers'.

Examples of problems for overseas workers

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Published by Friends of the Earth Trust