Commentary: Phoney war on the shelves

That perennial stock market bogey - a food price war - has reared its ugly head again. Sainsbury triggered the scare last Wednesday, announcing price cuts of up to 50 per cent on selected lines. Other supermarkets retaliated with price claims of their own. Grocery shares took a pounding.

The following day's newspapers were a feast of hyperbole, with headlines forecasting that this latest price war in the supermarkets would result in bills being halved.

In fact the Sainsbury promotion is modest. Only 5 per cent of its 15,000 lines are discounted at all; of the 750 discounted products, only 100 are cut by 25 per cent or more; and the promotion lasts only a few weeks. It is merely a slightly larger repeat of the January sales of the previous two years. Moreover, the price cuts replace smaller discounts operated all the year round.

The stock market cottoned on quite quickly, marking supermarket shares up again. Some newspapers reacted differently, accusing Sainsbury of hyping up its promotion and misleading customers. That is unfair. Sainsbury's announcement was exuberant, but within the bounds of honesty. The media - on one of the quietest news days of the year - chose to misinterpret it and then based their criticism on exaggerated coverage rather than the promotion itself.

This is not the first time the promotion has failed to go quite to plan. Last year Sainsbury withdrew its announcement after two hours on the screens, removing the gung-ho headline. It is partly a victim of its own sober, conservative reputation. If MFI or Texas Homecare had used similar language - 'prices slashed' and 'biggest ever sale' - no one would have batted an eyelid.

But it is also trying the old trick of giving different messages to different audiences - to shoppers, bargains galore; to shareholders, no impact on margins. Next New Year, the finance director and marketing director would be wise to have a long chat before announcing anything.