The Competition and Market Authority (CMA) has announced that it is concerned about Cérélia’s acquisition of the Jus-Rol business, saying the deal could “lead to higher prices and lower quality products for shoppers in the UK.”
Cérélia is the largest manufacturer of bake-at-home dough products in the UK, producing private label products for some of the UK’s largest grocers. Jus-Rol is the best-selling brand in the bake-at-home dough category, with few branded rivals.
Together, the businesses are the two leading suppliers of bake-at-home products to supermarkets and other grocery retailers, accounting for more than 67% of sales of such products to shoppers in the UK.
The CMA said its investigation found that, prior to the merger, Jus-Rol’s branded products competed against private label products supplied by Cérélia for space on supermarket shelves. However, following the deal, Cérélia would produce and sell both the Jus-Rol products and private label products, leaving retailers with fewer alternatives.
The regulator said it is “therefore concerned that the loss of the Jus-Rol business as an independent player could lead to increased prices to grocery retailers – and ultimately consumers – and lower quality products.”
Sorcha O’Carroll, Senior Director of Mergers, said: “Millions of people across the UK regularly use bake-at-home dough products, whether to rustle up a mid-week pizza for dinner or to make breakfast pastries for their families on the weekend. Consumers should know they’re getting value for money and not overpaying for their grocery products, especially as the current cost-of-living crisis stretches people’s budget even further. That’s why we won’t hesitate to refer this investigation further if our concerns aren’t addressed.”
Cérélia has five working days to submit suitable proposals to address the CMA’s concerns, failing which the CMA will progress to an “in-depth Phase 2 investigation”.
NAM Implications:
- Here we have a branded and an own label company combining brands & own label offerings.
- It is probable that the new owner (and the mults!) would want to maintain a clear distinction between the offerings.
- …for credibility at least!
- i.e. a difference in price and quality.
- i.e. own label at a discount to brand, and by implication some slight reduction in quality.
- The question really becomes: who gets innovation first?
- i.e. supply 5 O/L variants.
- …and select the best-selling three variants for the brand.
- All four mults would probably want a different product/formula i.e. restrict parts of the portfolio to different retailers?
- This degree of complexity may cause some retailers to encourage new entrants to the sub-categories?
