Food prices in Tobago cannot be described just simply as being higher in relation to what exists in Trinidad. The implication that this phenomenon exists throughout the entire island of Tobago is not so.It is my belief that one can find food prices in Tobago on par with, or even slightly lower than, the food prices of some of the large-scale supermarket chains in Trini-dad. Thus, the occurrence of higher food prices throughout the island of Tobago can be considered as somewhat of a myth. This statement will be validated in the ensuing analysis.The Tobago supermarket industry is currently dominated by four large players, namely the Penny Savers chain, Cost Cutters, Viewport and Bill Brown Supermarket. K-Mart Supermarket which recently terminated its operations was also among those competitors.
The majority of the goods sold in these supermarkets are obtained directly from wholesalers and distributors who are based in Trinidad and these goods are normally sold at the same prices as those that are offered in Trinidad.The only advantage where prices are concerned that a supermarket in Trinidad might be able to obtain over the Tobago supermarket from the distributors might be due to the large quantities that the supermarket chain in Trinidad would be able to purchase (economies of scale).There is no supermarket in Tobago that comes close to or is on par with the Hi-Lo, Tru-Value, Xtra Foods etc in Trinidad. Penny Savers is the only supermarket in Tobago that might be able to demand some lower prices because of it size.
Over 70 per cent of the goods that reach the supermarket shelves in these "large" supermarkets in Tobago arrive via 20-foot containers or large container trucks for which there is a freight cost attached, ranging from $172.50 for the 20-foot container to $1,200 for an equivalent size truck.It is extremely rare, and in some cases non-existent, that any of these shipping costs are applied to the prices of goods that are displayed on the supermarket shelves in Tobago.At times, these containers might have to be offloaded on the Scarborough port with hired labour, a cost which averages about $800 per container. Again this cost is not passed on to the consumer in the prices of goods that exist on supermarket shelves in Tobago.
Consequently, the "large" supermarkets in Tobago would use mark-ups ranging from as low as 10 per cent on milk products to 25 per cent on refrigerated goods. The average mark-up used for most dry goods in the four supermarkets mentioned is 15 per cent and it might go as high as 20 per cent.Research into the pricing mark-ups that occur in the supermarket industry in Tobago and Trinidad reveal that they are basically the same on both islands. There is evidence to suggest that some of the prices that exist in one of the Penny Savers outlets in Tobago are below the industry norm. In fact, some prices in that outlet are lower than those in the large supermarkets in Trinidad.
In Tobago, the relatively higher prices that are talked about are really found in the smaller mini-marts, shops and parlours that run the breath of the island. It is at these small outlets that the consumer feels the effects of higher food prices and the reason is simple. At present, Tobago has four large wholesalers in the marketplace and they are Joy Wong Feed Shop Distributors, Sunshine Enterprises, Jade Distributors and Yats Marketing specialising in cold goods.In the last 10 years, a number of Tobago wholesalers have gone out of business due to the fact that they were not able to compete with Trinidadian distributors who were coming to the island and selling directly to the same clientele to whom they also provide services. In addition, the general slow-down in the Tobago tourism sector has affected wholesalers in the Tobago market.
These four wholesalers mentioned above would, for the most part, purchase goods from Trini-dadian distributors at prices that are the same rate as those obtained by the four large supermarkets as there is no preferential treatment with regard to prices for wholesalers in Tobago.This means that the Tobago wholesalers are also faced with the same port charges and labour costs as the large Tobago supermarkets. In order for the Tobago wholesalers to make a profit, they would normally use a mark-up of between 10 and 15 per cent. This 10-15 per cent mark-up is the price at which the mini-marts, shops and parlours would purchase goods from the four wholesalers.
The small retailers would now apply a mark-up of between 15 and 25 per cent on goods for sale in their outlets. Thus, the higher prices in Tobago could add up to as much as 30-35 per cent overall for the product that cost the Tobago wholesaler the same as the Tobago large supermarket.With the opening up of travel between Tobago and Trinidad via the inter-island fast ferry, a number of small Trinidadian distributors also sell directly to mini- marts, shops and parlours. Their cost of travel would normally be reflected in the prices that they charge the small Tobago retailers and as a consequence this is taken into consideration in the price that the small retailer sets for the consumer.
Therefore, it is a fact that there are higher food prices in certain parts of Tobago when compared with food prices in Trinidad but solely based on the circumstances described above. However, it is not as widespread as some are making it out to be.The fact that the large supermarkets in Tobago are continually trying to keep prices as low as humanly possible must be applauded and it should be noted that at this point in time, it appears that no additional cost is being passed on to the Tobago consumer.A recommendation is that the Tobago wholesaler should be given some sort of preferential rate which would allow him/her to offer better prices to the mini-marts, shops and parlours which would ultimately benefit the consumer.
THOUGHTS
Mark-ups in the super-market industry in Tobago and Trinidad are basically the same.
The general slow-down in the Tobago tourism sector has affected wholesalers in the Tobago market.