Grocer Asda is stepping up pressure on its rivals with £200m of price cuts in 2014 as chief executive Andy Clarke vows to “redefine value”.

Asda has spent £25m cutting prices in the run-up to Christmas and will invest another £50m in the first quarter on own-label and branded food, the Financial Times reports.

The grocer plans to spend £1bn lowering prices over the next five years undercutting the likes of Tesco and closing the gap with discounters such as Aldi and Lidl, who are rapidly growing market share.

Asda chief executive Andy Clarke said last month that by slashing prices and improving products it will “redefine value”.

Internal figures seen by the newspaper show that Asda is on track to increase profit by 1.6% to £316m in its final quarter, which would trigger staff bonus payouts.