UK supermarket Sainsbury's scraps 'brand match' price scheme

LONDON (Reuters) - Britain's second-largest supermarket group Sainsbury's said on Thursday it was abandoning a price matching scheme on branded goods introduced five years ago to focus on lower regular prices.

Sales and profits at Britain's so-called Big Four grocers, which also include Tesco, Asda and Morrisons, have been hit by a price war as the success of German discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL] has prompted them to slash prices and invest in improving service.

Sainsbury's "Brand Match" had worked by comparing its prices with similar branded groceries at No. 3 player Asda. If Asda was cheaper on a basket of at least 10 items, Sainsbury's customers received a money-off coupon for the difference that could be redeemed against their next shop.

When Sainsbury's launched Brand Match in 2011 it compared its prices against both Asda and market leader Tesco. However, it stopped comparisons with Tesco in October 2014, arguing that Asda was seen as the benchmark on price.

Sainsbury's, which is currently the best performer of the big four, said the last Brand Match coupons would be issued on April 26.

“Customers have told us that they want lower regular prices, and that this is more important to them than Brand Match," said Marketing Director Sarah Warby.

"We’ve taken this on board and will now be investing all of the money from the scheme into lowering the regular prices on everyday products."

In February, Sainsbury's said it would phase out multi-buy promotions across its grocery business by August.

At 0915 GMT, Sainsbury's shares were up 2.6 percent at 287 pence.

(Reporting by James Davey; Editing by Mark Potter)