What happened? Asda has pledged to re-open a 5-10% price gap vs its cheapest full-line competitor (Tesco), and per their latest press release have now cut prices on 10,000 lines. Anticipating a response, we cut our estimates for both Tesco and Sainsbury (see last week''s detailed note Food fight - making cuts before the weigh-in). While things will likely play out over several months, late last week Tesco announced ''price cuts'' across hundreds of items with the tagline, ''We''ve not just cut prices. We''ve slashed them''. With our price analysis still heavily reliant on H.I. (human ingenuity/ignorance) we take on the more manageable task of assessing Tesco''s price cuts rather than Asda''s. Summary table below, but high-level takeaways: Tesco''s price cuts cover 288 items (c.1% of Tesco''s SKUs); the average price cut was c11% and the private label/branded split is c2/3 to 1/3 in favour of private label. On a sub-set of 42 items we compared with Asda, Tesco was still c.1% more expensive post the cuts (albeit a wide range of gaps), but more interestingly, only 2 items had seen Rollbacks at Asda. We also scanned the first 240 Asda items under the Asda.com Rollback tab (total of 4,155 on website - though we note many of these are multi-buy discounts on private label, not single item price cuts) - and found 8 of the 240, c.3%, were single item price Rollbacks on Asda branded grocery products (there were several cuts on private label non-food items and several private label items labelled ''Asda Price'' with not price cut mentioned), with the vast majority of cuts on branded products. BNPP Exane View: This is clearly early doors, but it does suggest that Tesco''s response will be measured and not tit for tat - we expect leveraging its customer data information advantage from Clubcard. We think it makes sense for them to focus on private label, where we believe long term investments mean Tesco has another competitive advantage Asda will find hard to replicate and...