French food manufacturers have rejected claims by the country’s grocers that suppliers are set to extract price rises from retail buyers, pushing up shopping bills.
Since the 2008 Law for the Modernisation of the Economy (LME), French retailers and suppliers are required to negotiate prices and terms for the coming year. These negotiations take place during the opening weeks of the year.
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A proposed law, called Loi Hamon after its author, finance minister Benoit Hamon, will reform consumer protection regulations. It will clear the French parliament in the new year. However, last-minute amendments could also challenge the retailers’ grip on supplier prices.
The retailers are objecting to clauses in the Loi Hamon that establish the suppliers’ terms and conditions as the basis for future negotiations. Faced with the unexpected prospect of a supposedly weaker bargaining position, the multiples opened up a rearguard action.
The retailers’ body FCD claimed manufacturers would look for a price hike of 5%, suggesting that would mean higher household grocery bills.
However, Jean-Philippe Girard, president of food manufacturers’ association the ANIA, said the claims were “completely false.”
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By GlobalDataGirard accused the retailers of indulging in ever more “devious” practices that allow them to determine the outcome of negotiations months in advance. “[Consumers] don’t want to pay the lowest price but the fairest price,” he told journalists. “That is what guarantees the quality, the security and the excellence of our products in coming decades. Let’s not sacrifice the future in a destructive and pointless war.”
On the basis of price observatory data published by FranceAgriMer in recent years, there is evidence retail margins have been maintained and even increased at the expense of the food manufacturing and producing sectors. Rising input costs, notably cereal prices, have caught intensive livestock operations in a scissor effect, obliging them to pay more in feed costs and make ongoing losses at the farmgate.
The awkward fact is underlying upward pressure from increased input costs will either lead to a series of collapses in the production sector or a more realistic sharing of the retail ticket. Either outcome will be bitterly contested by both sides.
