The grocery discounter Penny presented the evaluation of its “real prices” campaign last summer at the Green Week in Berlin. The finding is also disillusioning from the company’s perspective. The discounter, which is part of the Rewe Group, concluded that it would not repeat such a campaign again because it would not bring any new insights. “We cannot expect more from our customers,” summed up a spokesman.
As a trading company, you have an obligation to offer food inexpensively and affordable for everyone. The debate about food prices should be better conducted in politics. It is important to improve the general conditions there. Penny was open to different solutions. The discussion includes, among other things, an animal welfare tax, lower VAT rates on vegan products or more targeted subsidies. The farmers’ protests at the beginning of the year showed how conflict-ridden the issue is.
Penny still calls the week-long campaign a success because it generated a lot of attention for food prices beyond the industry. At the end of July last year, the discounter demanded the “true price” for nine of a total of 3,000 products in all 2,150 branches for a week. The “true price” essentially reflected the environmental costs, the so-called externalized costs. The 400-gram pack of Vienna sausages from Mühlenhof cost 6.01 euros instead of 3.19 euros. The following costs were added: 94 cents for the climate, nine cents for water, 1.17 euros for soil and 62 cents for health. For organic products, the percentage mark-up was lower because they had already internalized many follow-up costs or these were lower.
The University of Greifswald and the Technical University of Nuremberg provided scientific support for the price experiment. Essentially, the test should be whether consumers are willing to pay more for food if this can initiate the change towards a more climate-friendly and animal welfare-friendly supply chain from farmers to retailers.
Penny not only evaluated how many of the nine products were sold. The discounter also surveyed more than 2,000 consumers about their purchasing decisions. The result: sales fell sharply for eight out of nine products, especially in eastern Germany. The exception was a vegan product for which the price premium was minimal.
85 percent of those who didn’t buy said the products were too expensive for them. 46 percent said environmental aspects were “not important” to them. 30 percent did not understand the campaign. The group of people who bought anyway was much smaller. Around 90 percent of them justified their purchase by saying that they always bought this product and were interested in sustainability. 84 percent did so because Penny donated the additional income to the “Zukunftsbauer” project.
A spokesman for Penny sees the campaign as confirmation that customers buy differently than they say in surveys. Politics, not trade, is the issue when it comes to this issue. In any case, the environmental costs would have to be put on the table.