Supervalu owner Musgrave, one of Ireland’s leading food retail and wholesale companies, has called on the Government to urgently introduce a temporary financial support package for food retailers, including an energy rate cap.
he call from Musgrave comes amid rampant inflationary pressures on business, including surging energy prices that are hitting firms across all sectors. Most SuperValu and Centra stores are owned by local entrepreneurs working in partnership with Musgrave.
In a statement to the Sunday IndependentIan Allen, managing director of SuperValu and Centra, said the current inflationary pressures coupled with soaring energy costs have put its retail partners “under pressure like never before”.
“Musgrave is urgently calling on the Government to introduce a temporary financial support package for SME food retailers currently experiencing devastating energy price increases,” he said. “The package should include the introduction of an energy rate cap, the suspension of commercial rates, capital allowance super-deduction, VAT warehousing and the inclusion of food retailers in existing and future support schemes.
“Such a package is needed now to protect livelihoods and jobs in local communities and ensure food retailers and wholesalers, which provide Irish families with access to food and keep the food supply chain open and clean, can continue to operate.”
Other supports Allen called for included a rebate for food retailers when energy costs as a percentage of turnover increase over predefined thresholds.
Allen said food retail is “very energy intensive” given the perishable nature of the products the sector sells, with energy bills the second highest after labor for store owners. With sales volumes down on last year, he added that “surging energy costs” were compounding the cost of doing business in a high volume and low margin sector.
According to Allen, the average energy bill for a Supervalu and Centra will treble and could even quadruple on last year. Taking Centra stores as an example, he said energy bills could rise from around €50,000 in 2021 to about €200,000 in September 2022. “This is unsustainable,” he said.
“The Government has accepted there is a need for intervention on energy with support for households and other energy-intensive sectors. However, food retailers have not been eligible for any of these supports.”
Musgrave said he was asking Government to support the industry as it anticipates a “radical and rapid change” in the economic environment.
“Without swift intervention, there will be structural changes to these businesses and implications for their ability to service debt and sustain employment, and continue to support sporting organizations, charities, and services in local communities.”
Separately, Neil McDonnell, who heads up SME lobby group ISME, said he would be trying to establish if there was interest from members to join an energy purchasing group. Such a move would help SMEs lower energy costs through greater purchasing power.
He expected many companies would sign up due to being in “crisis mode” around energy.
John McGrane, executive director of Family Business Network Ireland, said there had been early signs of small businesses considering grouping together on procurement deals for energy.