Brands face axe in cut-price war

Asda and Kwik Save deal double blow to brand manufacturers as slow-selling lines are kicked out

Brand owners are facing a double blow with moves by supermarket chains Asda and Kwik Save to axe hundreds of grocery brands.

Asda is to axe slow-selling grocery products, in a wide-ranging review aimed at freeing space for higher-selling lines. Kwik Save is making room for its premium own-label range which will launch in the spring, and says it will have to cut secondary and tertiary brands, while retaining the market leaders.

The rationalisation of the grocery range across Asda’s 211 stores will cover mainly branded products rather than own labels, and it is thought the axe will fall most heavily on tertiary brands. Asda, which carries 30,000 lines in an average store, admits many brands “may not have a long-term future,” and says hundreds of lines are likely to be cut.

An Asda spokesman says: “We are looking at which brands are selling well, where there is potential sales growth, and which are less likely to be long-term winners.”

Asda is launching Value Cannonball to neutralise the effects of Kwik Save’s own-label launch (MW February 21), and is reported to be cutting prices on 200 lines.

Discount chain Netto has been increasing its number of branded products, and it is thought that the discounter could attract Kwik Save shoppers who do not wish to buy the chain’s new own-label products.

Rumours persist that Asda will cut prices by the equivalent of one per cent of gross margins.

There have been reports of weak trading at the chain – with like-for-like sales at only four per cent, the industry average, but well below its trading in previous years.

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