There have been many times in the past where we have seen an exodus of shoppers from Ireland to Northern Ireland – particularly around Christmas – simply because it was so much cheaper to get there. stock up in Newry only in a local supermarket.
But is a trip north today a way for households to save money on their weekly shop?
What’s in the basket?
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To try and compare prices, we picked up a few fairly daily groceries in Dundalk and then took a road trip to Newry to see how the price differed.
In the basket were bread, milk and eggs, as well as pasta, chicken, vegetable oil and toilet paper…
There is also a “luxury” item – a bottle of Prosecco.
For comparison purposes, the prices were exactly the same products at the same retailer.
The prices were also the standard prices – so no special offers, discounts or offers were taken into account.
After that, the big variable is the exchange rate – which, of course, changes minute to minute.
To complicate matters, the rate you see on an app is not necessarily the same as what your bank will give you when you buy something across the border, nor necessarily the price the retailer was dealing when imported products.
So to try to smooth out any sudden changes, the rate used here was an average of the last month.
So which side was the cheapest?
What is interesting is that there is no general trend; neither side of the border was consistently cheaper than the other.
In fact, it was a bit mixed.
Some goods were cheaper in Dundalk, and some were cheaper in Newry, and overall the price of everyday items more than balances out.
But hidden within that are significant differences.
Which products had the biggest price difference?
When it comes to eggs and milk, it’s actually quite comparable.
A liter of own brand whole milk costs €1.05 in Dundalk and is equivalent to €1.10 in Newry. So very slightly more expensive, but not by much.
The eggs I bought in Dundalk however were over 8% more expensive than the equivalent in Newry so you lose around 15c on six large free range eggs.
Meanwhile, chicken was nearly 30% more expensive in Dundalk.
Why is that?
There are a few general factors that could be at play – for example, VAT is slightly lower in Northern Ireland than it is in Ireland; business rates are also lower.
There is also probably an advantage stemming from ‘economies of scale’ – the fact that retailers in the North are part of a massive UK chain, compared to a relatively small company in Ireland.
So if the retailer in the UK is looking for a supplier of chicken for the whole group, for example, they place a much larger order, giving them much more influence over the price they pay per kilo .
They also probably have more suppliers to negotiate with than they would when looking for an Irish producer.
But perhaps the most important factor is the competitiveness of the grocery market in Northern Ireland.
In the Republic there are the Big Three – Tesco, Supervalu and Dunnes – as well as discounters Aldi and Lidl. Together, they make up about 91% of our total grocery spend each month.
In Northern Ireland, however, there are Tesco, Supervalu, Dunnes and Lidl; as well as Asda, Sainsburys, Morrisons, Iceland and the Co-Op.
And when you have a small market with so much competition, it helps drive down prices, especially on the everyday staples that almost all shoppers buy when they walk into the store.
But despite the many reasons why Northern Ireland would be cheaper, there are often times when it just isn’t.
One essential which was considerably more expensive in Newry than in Dundalk was bread.
A sliced white skillet was 90c in Dundalk and the equivalent of €1.33 in Newry…that’s nearly 50% more.
You might have assumed it would be the opposite, especially because so much of the flour used to make bread here comes from the UK, and is therefore subject to post-Brexit tariffs.
But what could skew this is supermarkets’ love of the so-called loss leader.
This is where they sell an essential product – like bread or milk – at cost or even at a loss, as a lure for shoppers.
The hope then is that they continue to spend money on other products while they are there.
What other products cost more in Northern Ireland than in the Republic?
Pasta had the biggest price difference of all the essentials checked.
In Dundalk, 1 kg of dried spaghetti cost €1.09, while in Newry it was the equivalent of €1.79… or 70c, or a 64% difference.
What we are seeing here is probably the effect of Brexit, as durum wheat, which is used to make pasta, usually comes from Italy and France.
Due to Brexit, a UK business buying Italian products now faces additional costs and tariffs, which is why pasta is more expensive in the UK.
In theory, the Northern Ireland protocol should allow Northern Irish retailers to avoid customs duties on Italian goods, but if they are imported into mainland Britain by the UK-registered company , they become much more difficult to avoid.
And it’s a similar story for vegetable oil.
The vegetable oil here is almost entirely made up of rapeseed oil – of which the UK is a producer.
However, there have been major harvesting issues in recent years – and due to Brexit – supplementing their own production with oil from certain locations in the EU has become much more expensive.
As a result, the price in Newry was 45% higher than in Dundalk.
You pay €1.39 a liter in Dundalk, but more than €2 in Newry.
So when you put it all together, what are you spending?
The cost of these seven items together was €20.15 in Dundalk.
The price of the same items in Newry was around €18.72 – so a bit cheaper, up to around €1.40, or 7%. Probably not enough for people to head to the border in droves.
However, these comparisons are largely based on own-brand products. When it comes to a number of branded products, Newry was always cheaper.
A large bar of a well-known chocolate was 33% cheaper in Newry, for example, while a multipack of crisps was 21% cheaper.
Both of these brands were British, which may partly explain this.
Elsewhere, a pack of nappies was around 8% cheaper, while a box of laundry detergent was 23% cheaper.
Meanwhile, a box of a well-known brand of men’s deodorant was over 48% cheaper in Newry – almost half the price.
And there’s another item in the basket that we haven’t talked about yet – and that’s our luxury item, the prosecco.
What was the difference there?
The bottle in question is basically an own-brand prosecco bottle – it’s made specifically for the retailer used, so not a premium option by any stretch.
In Newry it cost just under €10 – €9.82, to be precise.
In Dundalk it costs €20.
So it’s double the price, for exactly the same bottle of sparkling wine.
Why is there such a big difference?
There are a few factors at play.
For starters, the Irish excise is a bit higher than the UK.
It’s a bit higher for beer, but it’s much higher for spirits and wine.
In the case of this bottle, it is about 19% higher – if it were a stronger wine, it would be almost 26% higher.
For spirits, there is a difference of 22% in the excise duty applied.
And this higher excise rate comes on top of the slightly higher VAT rate mentioned earlier.
But the other important factor is the minimum unit price.
It’s a rule that came into force in Ireland earlier this year, and it means retailers can’t sell alcohol below a certain price, which is based on the amount of alcohol in it. in the can or bottle.
There is no equivalent law in Northern Ireland at the moment, although there have been consultations on introducing a law.
At €20 this bottle of Prosecco is priced well above the minimum price – but one of the effects of the minimum price is that it seems to have pushed other prices higher.
This is partly because brands may not want to be in the same price bracket as the cheaper option, and partly because they simply can – the higher price won’t seem so moved now.
It’s not just the Prosecco where there’s a difference either. It’s all over the alcohol range.
A box of 20 bottles of a popular beer was around 35% cheaper in Newry, a bottle of vodka was around 23% cheaper.
Will this worry retailers?
Almost certainly – many retailers in Ireland will be wary of this price difference, particularly in the run up to Christmas.
As we know, people often stock up on booze as Christmas approaches – and retailers normally respond by increasing the amount of booze they stock. They bring large quantities of cans and also offer special offers on different products like spirits and wine.
But they just won’t be able to do that, certainly not to the same extent, this year.
For example, while the large tray of cans is normally a Christmas standard, at least one retailer is considering doing without it for the first time.
This is because they should be priced somewhere in the region of €40-45 – compared to the previous standard of €20-25.
The assumption is that people just won’t accept them at that price.
But the fear will be that Republic shoppers are looking to head north for supplies instead – and while they’re there they may decide to do all their big Christmas shopping too.
It may not be cheaper, but if they are already there, it will be convenient.
The only thing that could go in favor of retailers in the Republic right now is high gasoline and diesel prices.
After all, some may do the math and find that the amount they will spend to make the round trip negates any savings they would make on their drink once there.