Pick n Pay will cap its profit on ginger and garlic until at least April

Business Insider SA
Garlic and ginger prices surged amid a shortage of supply in South Africa. (Image: Getty)
  • Pick n Pay has promised to cap profits on "ginger and garlic essential food items", in a deal with the Competition Commission.
  • It was one of the chains being investigated after a massive surge in the prices of garlic and ginger this year.
  • The deal is only in place until the end of March, but "may be extended" – for four weeks.
  • Franchise stores will be requested to follow the pricing of the stores Pick n Pay owns.
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Pick n Pay has agreed to put at cap on it profits in sales of ginger and garlic, the Competition Commission announced on Monday.

The chain has agreed to keep prices "for ginger and garlic essential food items" in check until at least the end of March, the regulator said. Should prices still be high at that point, the cap may be extended for another four weeks.

Prices on shelves may still go up, if the wholesale prices for ginger and garlic increase, but Pick n Pay will not increase its gross profits – at its corporate-owned stores – for a period going back to 28 January.

Franchise stores, which run as independent businesses, will be "requested", in writing, to keep their prices no higher than those charged at corporate stores.

In early February the National Consumer Commission announced it was probing Woolworths, Pick n Pay, Shoprite and Spar amid a surge in the prices of garlic and ginger.

Prices more than doubled in a matter of weeks thanks to a combination of strong local demand (at least in part due to the hope that ginger will help ward off Covid-19), trouble with domestic production, and currency shifts.

But the Competition Commission does not accept it is all down to market forces.

"Whilst wholesale prices for these products had increased due to heightened consumer demand during the second wave of infections, the Commission is of the view that this did not warrant the large increase in absolute margins seen in some instances," it said in a statement on Monday.

It said Pick n Pay was the "first" retailer to sign a memorandum of agreement with it on ginger and garlic prices, with no indication of the status of talks with other retailers, which it had "expeditiously engaged" after receiving complaints. 

(Compiled by Phillip de Wet)

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