Aldi strikes first in hygiene battleground among UK supermarkets

A new study by the Food Standards Agency (FSA) has revealed a surprising winner as the UK’s most hygienic supermarket chain.

Following a thorough FSA inspection of its stores, German chain Aldi achieved five star hygiene ratings across 99.7% of its supermarkets across the UK. Just 0.1% of UK-based Aldi stores scored less than four stars.

The inspection was conducted by Property Inspect, on behalf of the FSA. The firm develops software that monitors the cleanliness of property estates and is periodically enlisted by the FSA to test the UK’s supermarkets which attract some of the highest footfall in the country.

The news will be a further blow to the UK’s most established supermarket brands like Tesco and Sainsbury’s. Both companies have long been members of the FTSE 100 and are closely watched by investors.

This news will likely add to the pressure the incumbents face to prove they are still at the top of their retail game. Shareholders will surely be disappointed to find they are not blazing a trail for in-store hygiene in the current climate.

Work to be done for big name brands like Tesco and Sainsbury’s

Both Tesco and Sainsbury’s posted some of the highest numbers in terms of UK-wide stores with an FSA hygiene rating of three stars or lower.

Nine of Tesco’s 2,228 stores included in the inspection were three stars or worse, while seven of Sainsbury’s 1,225 stores included in the inspection were three stars or worse.

Stores located in Scotland were exempt from the latest FSA inspection, meaning these figures cover supermarkets in England, Wales, and Northern Ireland.

Warrick Swift, Commercial Director at Property Inspect, feels that the latest data suggests “more can be done” among the “big name brands” to improve hygiene performance – particularly in the current climate.

Swift said that stores with FSA hygiene ratings of three stars or less invariably lose “as much as a third of its business”, with shoppers using the rating as an invitation to “vote with their feet” and shop elsewhere.

Hygiene has understandably risen to prominence among consumers through the Covid-19 pandemic. Ensuring shoppers feel safe enough to visit and buy in-store has been at the top of supermarkets’ priorities since March 2020.

As the pandemic began, earlier research by Property Inspect revealed that more consumers placed greater emphasis on the hygiene ratings of the supermarkets they shop in.

34% of consumers would reject outlets displaying food hygiene ratings of three stars or less. This alone should be a warning flag to Tesco and Sainsbury’s, as well as investors in these iconic brands.

Interestingly, Asda stole a march on the rest of the UK's supermarket chains by becoming the first to utilise the power of automation to enhance the hygiene of its stores. Autonomous cleaning robots can operate on their own or with a staff member operative.

On automated settings, they follow a predetermined route in-store. Asda has also been testing automated trolley washes, providing periodic disinfection for trolley touchpoints that limit the spread of infections and optimize food hygiene across all in-store products.

Could hygiene impact the investment case?

There’s no doubt continued poor hygiene in big name stores like Tesco and Sainsbury’s could impact footfall, particularly if competitors such as Asda and Aldi are leading the way by demonstrating a commitment to innovation for food and store hygiene.

Nevertheless, there are other reasons for investors to remain interested in the incumbent retailers.

Food retailers can be good stocks to own when the world looks more uncertain. Take the last few years as an example.

While international travel, hospitality, and even property buying has been paused at moments throughout the pandemic, the British public has continued to buy food. In investors’ eyes, this makes food retailers a defensive stock to own.

The second key reason, which is linked to the fact they can still open their shop doors when others can’t, is their ability to continue paying shareholder dividends.

Because the earnings of food retailers like Tesco and Sainsbury’s tend to be steady, they’re able to continue paying shareholder dividends out of the company’s annual profits, when other companies may not. This is something we saw acutely over the pandemic, when business earnings were hit, so were dividends.

Investors like dividends as they are a way to earn an income from your investments but they also help build your wealth over the long term, as dividends can be reinvested.

Whether or not investors are looking for income, it’s important to ensure your investment is being held in the most tax efficient account. Otherwise, any investment profits you make could end up being shared with the taxman.

You’ll often hear these accounts called a tax wrapper, as they shield your increased personal wealth from taxation. A stocks and shares ISA account is one key example.

When your investments are within a stocks and shares ISA, you are protected from UK taxes on any dividend income or capital gains. UK citizens can invest up to £20,000 each year in a stocks and shares ISA.

Aldi: Equally committed to employer excellence as well as hygiene excellence

Not only is Aldi the most hygienic supermarket chain in the UK, but it’s also committed to being the UK’s best paying supermarket.

Both of which should help to drive hygiene and employment standards in the FTSE 100 listed supermarket chains in the months and years ahead.

Aldi has confirmed it will increase the hourly rates of pay for staff from 1st February.

Employees working at Aldi within the M25 will earn £11.55 an hour and those elsewhere will earn £10.10 an hour. Paid breaks, enabling staff to be paid for their shift breaks, will also be retained in 2022.

Giles Hurley, CEO of Aldi UK and Ireland, said the decision was based on the “amazing work” of Aldi’s staff “during the last 18 months”. Hurley said the commitment of Aldi’s workforce has “driven [the brand’s] success over many years”.