A senior Tesco executive reportedly told City analysts that retailers are making better profit margins on fuel sales after Asda’s takeover by the Issa brothers.
Britain’s biggest supermarket group recently held a meeting with Berenberg, the bank, which then told its clients that Tesco’s head of investor relations “did note that price competition in fuel pricing has reduced, Asda used to be price leader in fuel and it feels that the new approach has provided the whole industry [with] a tailwind”.
The revelation comes as analysis by The Times shows that fuel margins have approached early pandemic levels but car use is more than three times higher, at 90 per cent of 2019 levels. The fuel industry is making a 16.47 per cent margin based on pump prices of 146.92p, twice pre-pandemic levels, according to analysis by the RAC, Platts indices and Experian Catalist, the data analyst.
When approached by The Times, a Tesco spokesman said that “neither [the group’s head of investor relations] nor another colleague who was present at the meeting recognise the words used in that note, nor do they feel it a fair representation of what was said.”
Berenberg said The Times had “misinterpreted” the comments and said it would remove the newspaper from its distribution list.
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However, a senior source at Tesco and other senior industry sources agreed that since Asda’s £6.8 billion takeover by the Issa brothers and TDR Capital, the retailer had become less competitive on fuel prices after decades of being the industry’s price leader.
In November, Sainsbury’s usurped Asda as the UK’s cheapest supermarket for fuel for the second month running, selling petrol at 143.86p a litre against 144.73p a litre, according to the RAC.
An Asda spokesman said: “We have a long heritage of being the price leader in the supermarket fuel sector and that remains the case. We will continue to provide motorists with the lowest prices when they fill up with us.”
