The Tribune

• Roberts: ‘No sense to buy if shoppers resistant’ to cost

• BPL hikes ‘siphon off’ 5% of Super Value’s top-line

• Fears ‘rice soon be like oil’ over India’s export ban

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Super Value will stop buying products whose prices have “reached the limits” of Bahamian affordability, its owner disclosed yesterday, while revealing that soaring energy bills have “siphoned off 5 percent of our sales”.

Rupert Roberts told Tribune Business that suppliers must realise “there’s only so much the public are prepared to pay” as he revealed that the 13-store supermarket chain had stopped purchasing one-gallon bottles of Hellmann’s mayonnaise because consumers had stopped buying it because of the price.

Keenly aware of the impact escalating food prices, and the ongoing cost of living crisis, are having on Bahamian families, he added that Super Value’s buyers can no longer raise prices “without my consent or joint agreement” given the extent of post-COVID hikes.

Mr Roberts also said Bahamas Power & Light’s (BPL) soaring electricity rates, which are projected to peak this summer as the utility seeks to reclaim at least $90m in previously under-recovered fuel costs, are taking an ever-increasing bite of consumer incomes and spending power as shown by a recent dip in Super Value’s sales which he attributed to rising energy prices.

Away from BPL, international developments are threatening to further increase food costs for already hard-pressed Bahamian consumers. With Russia once again refusing to permit Ukrainian grain exports through the latter’s Black Sea ports, India late last week sparked fears of a global rice shortage by banning exports of its largest export category, non-basmati rice.

The southern Asian nation accounts for 40 percent of global rice exports, and its action - in a bid to calm its own domestic prices - has spared rice panic-buying by some Indian-Americans while more than tripling the cost of a 20-pound bag from $16 to almost $50 in some stores. Vietnam, the world’s third largest rice exporter, has this week seen its own prices hit their highest level in more than a decade due to India’s actions and the imminent cut-back in global supplies.

Both grain and rice are critical food staples worldwide and for most, if not all, Bahamian families so it is likely just a matter of time before these global-level impacts are felt at home given this nation still imports all it consumes. Philip Beneby, the Retail Grocers Association, yesterday suggested that “if you want it, rice will soon become oil” if India’s export ban proves long-lasting and extends to other rice categories.

“We’ve had a price increase in rice, but we’re not aware of any scarcity and I hope - that being one of our staples - it never becomes scarce,” Mr Roberts told Tribune Business as he revealed that Super Value is halting product orders where Bahamian shoppers “refuse to pay” the prices being charged.

“I think that manufacturers have to realise that prices are high, and people are prepared to pay only so much,” he added. “They’ll realise it when their sales go to zero. Prices can only go so high and the public will refuse to pay.” Mr Roberts cited as an example one-gallon bottles of Hellmann’s Mayonnaise. “It went so high that the public stopped buying it, and we stopped buying it,” he explained.

“We got shot of a shipment by selling it at half-price. Hellmann’s must know they have to find cheaper ingredients - cheaper oil, cheaper eggs. We’re noticing it in our sales. The price goes up, and sales go down. We’ve seen it with other items, too, and have started a policy where we’re not necessarily marking on a percentage.

“We put dollars on when an item goes over $8. We don’t collect a percentage any more. We put a dollar mark-up on it because the public are not otherwise prepared to pay and we want the item to keep selling, especially if we have the warehouse loaded with it,” Mr Roberts continued.

“It’s got so bad now that we’ve got an agreement where [the buyers] cannot raise any prices without my consent or joint agreement. Instead of raising prices, we may decide not to order in some cases. We sell-off what we have at cost, and we said with the mayonnaise we would sell at half-price to get rid of it and never order it again.

“Manufacturers realise they have to come up with something better and have to cut their costs somewhere. There’s a limit that all consumers are prepared to pay, and we will decide what to do based on what the manufacturers decide to do. If they raise prices, we’re not going to buy it. There’s no point if the public have reached the point of resistance. You’ve reached the limits of the consumer, and have reached the bottom of their pocket books.”

Mr Roberts said that within the past ten days four major food producing groups, including Procter & Gamble, Kelloggs and General Milk, have all increased their prices. He added that his latest inquiries with major US-based food producers, undertaken some two months ago, saw predictions that food costs will continue to increase until early 2024.

“That’s very disappointing, but that’s what the manufacturers and economists are saying and, of course, it’s proven to be true up until now. We’ve constantly had increases, never a decrease. Never, never,” the Super Value chief said, describing Russia’s refusal to permit Ukrainian grain exports through the Black Sea as “serious”.

Revealing that food scarcity, rather than cost, was his greatest concern, Mr Roberts said Russia’s actions would force African and Middle Eastern countries to look to North America - the US and Canada - as supply alternatives. This is where The Bahamas sources its grain and wheats from, and such a scenario would “put pressure” on the prices and supplies offered by this country’s suppliers.

Besides the external factors, Mr Roberts said Super Value is now being impacted by local forces. “I noticed this week that BPL took some of our sales, and BPL will continue to take some of our sales all through the summer,” he told Tribune Business. “I don’t know where it’s going to go, but I can say it is siphoning off 5 percent of our sales already.

“We’re keeping up with last year, and that’s because we’re fighting to keep up. Last week was the first week we noticed the break. It was clearly indicated by the Sunday morning shoppers when we started to get negative sales. We said there’s something wrong.”

To offset these pressures, Mr Roberts advised Bahamians to switch from more expensive recognised brands to private labels that offer similar quality. “We’re going through the markets and buying the best. Vegetables and canned meat from Brazil will shortly hit the shelves, and consumers will find they are cheaper than the US market,” he added.

“Every day that’s all we concentrate on. That’s why we’re in business; to solve problems. That’s where your reward comes from - as a problem solver. You get the best rewards. But it’s probably going to be a long, hot summer. I hope it doesn’t get any hotter.”

Mr Beneby, meanwhile, noted that while rice is price-controlled The Bahamas will likely not escape the fall-out from India’s actions. “Without a doubt we will be affected by it. That’s all I can say right now,” he told Tribune Business. “How much and when, I cannot say. There’s nothing we can do. Rice is a staple for most families and the restaurants. It is what it is.

“Wherever the other 60 percent of rice is exported from, I guess the wholesalers and importers would have to try and see if they can source it from elsewhere at a better price. The other countries, though, are going to raise their prices because India has stopped exporting. That’s what normally happens. If you want it, rice will soon be like oil. We are importers. Whatever increases are placed around the world, we will no doubt import in an increase here.”

These developments will likely be seized on by the Government as further justification for efforts to improve Bahamian food security and grow more products at home.