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Asda launches premium brand despite high UK food prices

Grocery retailer Asda has launched a new premium food brand across its UK outlets, a move that comes in the face of an increasing number of households saying they are struggling with the cost of living, particularly with respect to food prices.

The launch will happen over the next few months across multiple categories and will include over 500 different products. The first product in the range appeared on store shelves across the country at the end of May, identified by an emerald green and gold palette to highlight the new brand name.

Asda’s market share has witnessed a steady decline in the past few years, as market research from Statista demonstrates . The retailer has continued to see stiff competition from market leaders Tesco and Sainsbury’s, while discount retailers Aldi and Lidl have steadily gained market share in the face of rising costs of living.

The retailer is also far from being the preferred supermarket destination, according to a 2024 survey of more than 3,000 UK grocery shoppers from consumer watchdog Which? conducted at the beginning of the year. The survey found that Asda ranked eighth out of nine retailers, with Marks & Spencer being voted into the top spot.

With the discount segment dominated by Aldi and Lidl, Asda executives are looking to premiumisation as a key strategy to help claw back its flagging market share.

Aiming at value for money and quality

Discussing the launch of the new premium brand, Sam Dickson, VP commercial strategy, own brand, at Asda, detailed how the launch aimed to highlight how value for money can also be woven in with high quality. He went on to say:

"The launch of our new premium brand, Exceptional, marks an exciting time for Asda’s own-brand offering. We’ve developed a range which offers customers something they’ll feel really proud to put on the dinner table – these products ooze quality and celebrate the very best of Own Brand, with taste at their heart.”

The launch of the new premium range comes at a time when many UK households say they are struggling with rising costs and many consumers are trying to make their monthly budgets stretch as far as possible by using discount food retailers.

UK household budgets under pressure from high food prices

A report from the Office of National Statistics (ONS) showed that for the month of May, 54% of UK adults reported an increase in the cost of living, a figure that was higher than the previous month. The report also highlighted that the cost of living was perceived to be the biggest issue that UK adults are currently facing, with 91% citing higher costs for food shopping as the biggest issue they are struggling with.

The ONS statistics also show that in the period from July 2021 to March 2024, the average price of olive oil has gone up over 120%, granulated white sugar has cone up over 72% and still mineral water has risen by more than 65%.

But with the Office for National Statistics reporting that food and non-alcoholic beverages rose by just 1.7% in May 2024, Asda executives will be hoping that the worst of the cost of living crisis is nearing its end, making the timing of its premium label launch a better bet should food prices continue to stabilise.

Asda has been working on improving the overall quality of its offerings in the past few years, claiming to have invested over £170 million in a number of initiatives to reinforce this. Those initiatives have included the Just Essentials range, launched in 2022, the Asda Bakery refresh last year and the launch of the new sub-brands Bistro and Bom Bahia.

It has also been improving the quality of its own-label lines, having launched more than 4,500 new products with improved formulations that are claimed to improve taste and compare more favourably with offerings from more upscale food retailers such as Marks & Spencer.