Blog: Dean BestBrands hit with "profiteering" slur

Dean Best | 21 January 2008

To hear a retailer complaining bitterly about the prices charged by its suppliers would provoke a wry smile at food manufacturers from Melbourne to Minnesota.

But in France, the situation is somewhat different. French law prevents retailers from negotiating prices with their suppliers. The law also bans below-cost selling in order to protect the country’s smaller food producers and to protect smaller French shops from being under-cut by supermarkets.

However, with rising commodity costs and food inflation focusing the minds of all across the industry, complaints are being heard loud and clear from France’s retail giants – especially supermarket chain Leclerc and its belligerent chairman.

Michel-Edouard Leclerc has accused some of France’s leading brands of “profiteering” from rising commodity costs. Some suppliers, M Leclerc argues, are using rising commodity costs as a ruse to get rich. The likes of Danone, Lactalis and Bel have been on the receiving end of Leclerc’s ire, with the retailer publishing ads in the French press naming those who he believes are hitting consumers in the pocket. And with the French, like the rest of us, growing increasingly concerned about the cost of living, brand-owners could suffer if the “profiteering” tag sticks.

In recent months, the French government has commissioned a study into the laws governing the country’s retail sector. This week, French economist Jacques Attali, who has led the investigation, will publish his findings. Attali has already proposed legalising below-cost selling – a suggestion France’s food producers have roundly rejected. Attali’s final report hits desks on Wednesday, which could prove something of a watershed day in France’s food industry.

Across the Atlantic, it seems Tesco’s entry into the US last autumn has been a similar turning point. Last week, it emerged that Wal-Mart is set to launch a counter-attack to Tesco's Fresh & Easy venture with its own smaller-format stores. American consumers want more convenience and Wal-Mart looks to be planning to tap into that trend. Tesco may have been first to identify a gap in the market but, with signs that US shopping habits are changing, Wal-Mart may not be the UK retailer’s only rival in a market long seen as a graveyard for the Brits.


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