Purchasing power parity?

by on June 10, 2010 at 6:11 am in Economics, Food and Drink | Permalink

…due to the strength of the euro against the pound, hundreds of Britons living in France are now using the internet to order their food, including many French specialities, from British supermarkets.

Simon Goodenough, the director of Sterling Shopping, a delivery firm based in Brackley, Northamptonshire, says his company has 2,500 British customers in France and is running five delivery vans full of food to France each week.

…we have delivered bottles of Bergerac wine bought from Sainsbury's to a customer in Bergerac. We even have a few French customers who have now heard about what we do. They love things like curries and tacos, which they just can't get in France."

This seems to be an arbitrage opportunity:

"The savings for buying food, in particular, are amazing due to the strength of the euro. Customers tell us that for every £100 they would spend in France buying food, they save £30 buying through us, even with our 15% commission. A lot of people are using us to get things they really miss, such as bacon and sausages."

The full story is here.

1 Ray June 10, 2010 at 6:25 am

you’ll notice these are not new companies that have sprung up over night. Where British expats are clustered densely enough you will find businesses aimed at them – supermarkets selling British food, expat handymen, doctors and dentists whose Britishness is their USP.

2 Grant Gould June 10, 2010 at 6:59 am

…and people wonder why they’re called a nation of shopkeepers.

Keep up the good work, Britain!

3 ebs June 10, 2010 at 8:17 am

hm – what strength of the euro?? I guess if compared to pound highs.

I think more pertinently, food prices are generally higher in France, but that is by no means true of all goods (though there are others).

4 E. Barandiaran June 10, 2010 at 8:49 am

Tyler, for centuries we have known that whenever there are two or more currencies there will be many arbitrage opportunities. Technology and governments have always been the main restrictions to take full advantage of them. Modern technology makes easier to do it. Unfortunately modern governments –often thanks to technology– may impose additional taxes and other restrictions on transactions to prevent arbitrage.

5 Sam Lyon June 10, 2010 at 9:56 am

@what: The Euro’s only depreciating in relativly recent terms against the pound – through 2008 it was far below what it is now.

Is this the required lag-time for these businesses to move into the arbitrage market opportunity? Or have we only just started to take notice?

6 Someone from the other side June 10, 2010 at 2:58 pm

That sounds pretty asinine looking at recent exchange rate trends. I know the Swiss buy from Germany, but then they have always done that to some degree. It just now dropped in price by nearly 10% compared to 6 months ago…

7 Jethro June 10, 2010 at 7:35 pm

Is there a more British surname than Goodenough? I’d love to know the family history behind the origin of that name.

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