The chief executive of Sainsbury's has issued an urgent plea to the government, calling for assistance for energy-intensive food companies grappling with skyrocketing energy bills triggered by the Iran war.
Simon Roberts Calls for Action
Simon Roberts, the supermarket's boss, revealed that Sainsbury's is engaged in discussions at a “senior level” regarding the necessity of government intervention. This comes amid growing concerns that farmers and producers will be forced to pass on higher costs, potentially leading to price increases for consumers.
Roberts noted that Sainsbury's has yet to see any direct cost impact from the Middle East conflict, but there are fears that the first signs of energy cost spikes will affect salad and other producers that rely on heating for greenhouses and polytunnels.
No Shortages but Pressure on Inflation
Mr Roberts insisted that there are no issues with shortages, stating: “We are seeing some of the highest ever availability on fresh food.” However, he acknowledged: “There is pressure on inflation and food producers have high energy costs as part of that. We will be working with our suppliers to do as much as we can to mitigate the impact.”
Government Dialogue and Economic Shock
The Sainsbury's boss confirmed that the company has been “in dialogue” with the government about supporting food companies with energy costs. “We had very productive conversations two, three weeks ago,” he said. “There are a number of areas we discussed. Energy is a key topic we are talking about because it is a significant cost to the food industry.” He added: “Now is the time for government to look at what it really can do in the food sector.”
However, this call for help comes as the government faces an economic shock from the Middle East war that could impact tax receipts. There are also demands to provide financial support to millions of low-income households who are expected to face higher energy bills later this year.
Impact on Businesses and Sainsbury's Outlook
One example of soaring energy costs, even before the conflict erupted, was the collapse of the famous pottery maker Denby. There are fears that other firms could be driven out of business by any spike in energy bills.
Sainsbury's has warned that uncertainty over the Iran war's impact on shoppers is clouding its outlook and could drag profits lower this year, echoing concerns voiced by rival Tesco. The supermarket, which holds a 15.6% share of the UK grocery market, said the conflict in the Middle East would affect both customers and its business. It cautioned that the duration and extent of the war’s impact are “very uncertain,” as it forecast underlying operating profits between £975 million and £1.075 billion for its 2026/27 financial year.
Financial Performance and Shopper Behaviour
Sainsbury’s, whose share price has risen over 30% in the last year, reported profits of £1.025 billion for the year ended February 28, down 1.1% but in line with expectations. The company said it had made a positive start to its new financial year and expected to continue outperforming the grocery market, although trading at its general merchandise arm Argos continued to reflect subdued conditions.
Roberts stated that shoppers have yet to make any noticeable adjustments due to jitters over the financial impact of the Iran war. He suggested they are most likely to switch to own-brand ranges and buy more frozen food. He also insisted there are no issues with fuel shortages on its forecourts: “In the first couple of weeks of the conflict, there was more demand for fuel. Through that period, we came under a bit of pressure on our forecourts but the situation now is stable. We are in a good situation with fuel across our forecourts.”
