More

    Asda boss refuses to answer questions over fuel pricing strategy

    (Photo by TOLGA AKMEN/AFP via Getty Images)
    Supermarket Asda’s profit margins on fuel have tripled since before the pandemic, MPs were told on Wednesday (19), while the chain’s co-owner repeatedly refused to explain its pricing strategy.
    According to the reports, Mohsin Issa declined to answer multiple questions on whether Asda had increased its profit margins on fuel since its takeover in 2021, prompting MPs on the business select committee to become increasingly furious as the retailer insisted it had not changed its strategy.

    The Competition and Markets Authority (CMA) published a report this month saying that drivers were paying more for petrol and diesel than before the Covid pandemic because of “weakened” competition.

    The CMA told the committee there had been a “significant change” in the supermarket’s pricing approach after its £6.8bn takeover by the billionaire Issa brothers and their private equity partner in 2021. Asda is now set to buy the UK arm of the Issas’ EG Group petrol forecourts business for £2.27bn.

    Dan Turnbull, the director of the CMA, told the committee that the chain had stuck with its strategy of being price leader but had altered course on two other aspects – increasing profit margins and to “deliberately feather” prices – or to take more time to react to drops in the wholesale price of fuel. He said this was particularly the case with diesel, where there had been a lot of volatility in prices.

    “We found that between 2021 and 2023 they significantly increased their internal fuel margin targets on a pence per litre basis, and indeed by 2023 those pence per litre targets were three times what they’d been in 2019,” he said.

    Issa reportedly refused to confirm whether that was the case, saying there were many elements that contributed to decisions on fuel pricing.

    He insisted the group had not changed its strategy, saying Asda was “proud of being a price leader” and, while he refused to say directly whether the new management had increased profit margins on fuel, he suggested the group had, saying “we invested that margin into food”.

    “We don’t see this as a fuel business on its own. We see this as a holistic business,” he said. The retailer’s overall profit margins had fallen from 2.7 per cent to 1.7 per cent under his ownership, Issa said. He insisted he was “absolutely in touch with where customers are coming from” having grown up in a “two-up, two-down” and said Asda had invested in keeping food prices down and in its loyalty scheme.

    Latest

    Indian whisky, Indri, joins Mangrove Global ahead of UK launch

    Mangrove Global has further expanded its world whisky portfolio...

    Two premises in Seaham closed following seizure of illegal cigarettes and vapes worth £7,000

    Two Seaham businesses have been ordered to close for...

    Sharwood’s celebrates National Curry Week retailer and local community

    Sharwood’s cooking sauces – a brand seeing growth in...

    Seabrook unveils on-pack promo offering ‘seaside adventures’

    Seabrook has unveiled a new on-pack promotion, Seaside Adventures,...

    Don't miss

    Indian whisky, Indri, joins Mangrove Global ahead of UK launch

    Mangrove Global has further expanded its world whisky portfolio...

    Two premises in Seaham closed following seizure of illegal cigarettes and vapes worth £7,000

    Two Seaham businesses have been ordered to close for...

    Sharwood’s celebrates National Curry Week retailer and local community

    Sharwood’s cooking sauces – a brand seeing growth in...

    Seabrook unveils on-pack promo offering ‘seaside adventures’

    Seabrook has unveiled a new on-pack promotion, Seaside Adventures,...

    Funkin Cocktails celebrates 25 years of flavour with £25k on-pack prizes

    Funkin Cocktails, the RTD cocktail brand, is set to...

    Two premises in Seaham closed following seizure of illegal cigarettes and vapes worth £7,000

    Two Seaham businesses have been ordered to close for three months after more than £7,000 worth of illegal cigarettes and vapes were seized. Peterlee Magistrates'...

    Sharwood’s celebrates National Curry Week retailer and local community

    Sharwood’s cooking sauces – a brand seeing growth in the independent channel year on year, celebrated National Curry Week 2023 last October by launching...

    National Rice Week returns in September 

    The Rice Association has announced that National Rice Week will return for a seventh year from 9 – 15 September 2024. The annual celebration will continue...