Tesco hikes price of water amid heatwave

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Tesco has hiked the price of its budget bottled water and fizzy drinks as thirsty customers scramble to keep hydrated in the hot weather.

The supermarket giant raised the price of its two-litre bottles of Everyday Value water and cola by 41% to 24p last week, according to the Guardian, putting it well ahead of rivals Asda, Sainsbury's and Morrisons.

The price rises came amid fears of bottled water shortages as temperatures soared above 30 degrees in some parts of the country.

The Guardian reports that grocers are recording a doubling in water sales during the sweltering weather.

Commercial move
Tesco said its price increase last week reflected the cost of production, which it kept as low as possible. A spokesman said: "We think four bottles of filtered water, cola or lemonade for less than a pound is still very good value."

Yet retail commentators remark that it isn't a smart move in the supermarket price war.

Shore Capital analyst Clive Black said: "Tesco has probably jacked the price up because it's hot and product is going out the door. It's taken a commercial view but it's not necessarily one all its punters will like."

He said the price hike suggested that either Tesco was trying to ration drinks because supplies were tough to come by or it wanted to increase its profits.

Supermarket war
Sainsbury's was the UKs favourite and most profitable supermarket for decades, before being overtaken by Tesco in 1995 and Asda in 2003.

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While Tesco remains the biggest supermarket with a market share of 30.5% (down from 31% last year), clear polarisation of the grocery sector has shaken up the market in recent years.

Data from Kantar reveals that discount chains Aldi and Lidl, along with high end grocer Waitrose, won more customers than any of their supermarket rivals last year.

Meanwhile, Asda, the UK's second biggest supermarket, is suffering hardest from the economic squeeze as customers switch to cheaper rivals and the number three supermarket, Sainsbury's, threatens its position with a clever balance of price and quality.

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