Sainsbury's has snatched the moral high ground on healthy eating from its major rivals, analysts said this week.

In a report on the retailer's medium-term prospects, Deutsche Bank analysts said that they believed recent public comments by Justin King, chief executive, on nutritional labelling had cast Tesco in a poor light and shored up Sainsbury's own position in the national dietary debate.

James Collins and Ingrid Azoulay, the authors, said: "The Sainsbury's brand could not be better placed to capitalise on the current mood of the nation in terms of issues such as health, organics, provenance and sustainable sourcing, and the management must be given credit for the PR effort that has gone behind this.

"Justin King's current adoption of the moral high ground in food labelling (the traffic light vs RDA argument) is a case in point, championing Sainsbury's as a healthy place to shop and neatly condemning Tesco by association. We don't think these themes are a fad or that any of the other large players will be able to match/beat Sainsbury's brand association. 'Cheap' food is increasingly being associated with being 'bad' food.

"Customers are showing an increasing inclination to pay a premium for a better quality/healthier/more ethically sound product."

The authors believed that Tesco's brand was "not in the right place to the same degree". They added: "Weekly press articles on Tesco's dominance make it more difficult for customers to associate the brand with such positive initiatives."

Collins and Azoulay also predicted that Sainsbury's growth would continue above the market average of 3% for four years because it had started to "match reality to customer expectations of its brand".

"This management is starting to consistently deliver on brand expectations - removing price as a barrier, correcting service and availability and driving quality and innovation."

Topics