Shoppers paying too much for baked beans and baby formula

Shoppers are paying too much for branded baked beans and baby formula, the UK’s competition watchdog has found, as suppliers have increased prices by more than their costs increased.

The Competition & Markets Authority (CMA) said large brands were contributing to higher food price inflation by hiking their prices more than necessary.

It said around three-quarters of companies making products such as infant formula, baked beans, mayonnaise, and pet food were making more profit per item than they were two years ago

It follows a fierce push-back from some of the UK’s largest consumer goods companies which have denied allegations of profiteering.

Unilever earlier this year hit back at claims it had raised prices of products, including Marmite and Hellmann’s mayonnaise, more than necessary.

Former chief executive Alan Jope said: “I know it’s an inconvenient truth, but we have not been profiteering in any way, shape, or form.”

The competition regulator said these companies were making less profit overall despite price hikes, as more customers had switched to own-brand alternatives.

Sarah Cardell, chief executive of the CMA, said: “While in most cases the leading brands have raised prices more than their own cost increases, own-label products are generally providing cheaper alternatives.”

Her comments came as CMA unveiled findings from its latest investigation into grocery pricing.

Regulators had initially been looking at claims of ‘greedflation’ among supermarkets but found no evidence of wrongdoing.

The CMA said it would, however, be kicking off an investigation into supermarket loyalty schemes, including Tesco’s Clubcard and Sainsbury’s Nectar cards, in January next year.

It follows concerns from Which?, as the consumer rights group said customers who are not part of schemes could be paying higher prices than they typically would if supermarkets did not have loyalty cards.

The CMA said: “Food price inflation has put huge strain on household budgets, so it is vital competition issues aren’t adding to the problem.”

It said its investigation uncovered a particular issue in baby formula because there is very little availability of own-brand alternatives.

The CMA said it would be reviewing the dynamics in the baby formula market after prices rose by 25pc over the last two years.

Earlier this year, supermarket chiefs criticised laws limiting how formula could be sold in the UK.

The legislation, which is designed to help promote breastfeeding, stops retailers from telling customers about price cuts on baby formula or allowing it to be included in loyalty schemes.

Iceland managing director Richard Walker said the UK needed a change in law “so that retailers can help families feed their children”.

CMA said around three-quarters of companies making products such as infant formula, baked beans, mayonnaise, and pet food were making more profit per item than they were two years ago.

Heinz has come under fire for raising prices over the past year. Tesco pulled the brand’s baked beans from its shelves in 2022 after what it said were “unjustifiable” proposed price increases.

Heinz said it needed to pass on the rising cost of ingredients. Tesco eventually relented and restocked the company’s stocks.

In January, the price of many Heinz products rose again in what the business said was a “last resort” to cope with soaring costs.

A Heinz spokesman said: “Price increases made over the last two years have always been below inflation, and we’ve absorbed costs where we could. We do not anticipate any new price increases at this time.” 

The CMA’s findings follow a fierce push-back from some of the UK’s largest consumer goods companies which have denied allegations of profiteering.