Revealed: supermarkets take fat profits out of Irish meat

For every €1 spent on prime cuts of fresh meat, supermarkets are taking up to almost half for themselves. An investigation by the Irish Farmers Journal reveals for the first time the level of profits that supermarkets in Ireland are making on Irish beef, lamb, pork and fresh produce, even at discounted prices.

The Irish Farmers Journal has obtained internal price guides sent to supermarket management which reveal that Irish supermarkets are making gross profit margins of between 20% and 45% on fresh meat.

Even with promotional activity on these products such as 33% off or half price deals, the documents show that supermarkets can earn double-digit profit margins on almost all fresh meat sold in store.

Every other meat product, including, beef, pork, lamb and chicken, made at least 10% profit margin under promotion

An analysis of these documents shows that out of 50 fresh meat products sold in a leading supermarket chain, only one item was sold at a single-digit profit margin of 5%.

Every other meat product, including, beef, pork, lamb and chicken, made at least 10% profit margin under promotion. Without promotions, fresh meat products are consistently earning profit margins in the region of 20% to 30% for supermarkets.

In the graphic above, a number of products have been selected from these documents to illustrate the level of profit margins in supermarkets.

Sirloin steak sold at €10 on the shelf is leaving the supermarket with almost €1.80 in profit, or a margin of 18%.

A €1 price reduction on this sirloin steak still earns a 14% margin for the supermarket.

Round roast

When it comes to a round roast cut of beef, the retailer is getting almost a third of the selling price.

For example, a round roast pre-promotion selling at €12 earns a profit of €4, or a margin of 33%. Even under promotion at half price, retailers are still making a 10% profit margin on selling round roast.

The same trend is evident in pork, chicken and lamb. A leg of lamb retailing at €14.50 will make supermarkets almost €5, equal to a 34% margin.

Even with a promotion of a 33% price reduction, a leg of lamb will still earn the retailer a profit of €1.50, equal to a 15% margin.

Price promotions on these products only reduce margins to 35% and 13% respectively

When it comes to pork, the retailer gets almost half of the selling price. A pork loin selling at €12 will earn the retailer €5.40, which is equal to a 45% profit margin.

At the same time, a whole chicken selling at €6 earns the supermarket a profit of €1.70, or a 28% margin.

Price promotions on these products only reduce margins to 35% and 13% respectively.

The Irish Farmers Journal investigation shows that supermarkets are even making healthy profit margins on fruit and vegetables, which are often sold for rock bottom prices.

A net of Dutch onions sold at €0.69 earns profit margins of 14% for the supermarket, while a mixed bag of carrots and parsnips sold at €2 will earn a 40% profit margin.

Despite contrary claims by the retail sector, it’s clear from the Irish Farmers Journal investigation that supermarkets are making very healthy profits on selling fresh meat.

Even under promotion, meat is still earning double digit margins for the supermarkets at the same time as farmgate beef prices are below the cost of production.