In the hope of lowering prices on the shelves more quickly, the executive presented a bill on Wednesday setting the end of discussions between professionals in the sector at the beginning of January, instead of March 1.
A technical subject, but which has very real consequences on the wallets of the French. The government will unveil, Wednesday September 27 in the Council of Ministers, the text advancing the timetable for commercial negotiations between suppliers and distributors for 2024. The bill must be examined in the National Assembly at the beginning of October.
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Its objective: to accelerate the decline prices in supermarkets, while the costs of certain raw materials and energy have started to fall, without always being reflected on the shelves. What do these negotiations consist of? And is it certain that bringing them forward will have an effect on food prices, whose inflation only slowed slightly in August?
Prices blocked for a year after negotiations
Every year, between the beginning of December and the beginning of March, supermarkets and their suppliers discuss the prices at which the former buy from the latter the products sold the rest of the year to consumers. Each major retail brand comes to an agreement with its suppliers (Danone, Barilla, Herta, Coca-Cola, etc.). These negotiations only concern major, so-called “national” brands. Private label brands, created or owned by supermarkets (such as Reflets de France at Carrefour or Marque Repère at E. Leclerc), are not affected.
However, since the Covid-19 epidemic and the war in Ukraine, the costs of manufacturing food have fluctuated enormously, sometimes from one month to the next, often upwards. But, with the current system of negotiations, the conditions of sale are fixed once a year for the whole year. When manufacturers’ manufacturing costs increased in 2021 and 2022, without shelf prices following suit, their margins fell. Faced with this situation, following the last negotiations in March 2023, manufacturers therefore obtained an average increase of 10% in prices.
Since then, the costs of energy and certain agricultural raw materials, such as cereals or oils, have started to fall, reports the FAO, the Food and Agriculture Organization of the United Nations. In this context, the agri-food industry achieved record margins this year, noted Economic alternatives . Anne-Sophie Alsif, chief economist of The analysis firm BDO sees a catch-up effect: “Companies are trying to regain their margins, to regain what they have lost” when commodity prices were high, but not yet reflected in prices.
A “name and shame” with contrasting results
For his part, theThe government has increased pressure for players in the sector to quickly return to the negotiating table and pass on the declines recorded in world prices. At the beginning of June, Bruno Le Maire thus called on the 75 main food manufacturers to reduce their pricesand threatened to resort to “name and shame”, the public denunciation of bad students. Thirty-nine of them, including Bonduelle, Haribo and Panzani, agreed in mid-July to price reductions or promotions on 1,000 products. According to the president of the National Association of Food Industries (Ania), Jean-Philippe André, declines ranging “from 5% to 18% depending on the product” were recorded. A first effort welcomed by the Minister of the Economy, but considered insufficient. Some “Industrial groups are not playing the game well and could do more”he said at the end of August on France 2, openly citing Unilever, Nestlé and PepsiCo.
At the same time, Bruno Le Maire praised a “global agreement between manufacturers and distributors” aimed at blocking or lowering prices on 5,000 references. In addition to the reductions agreed by manufacturers in the summer, part of this announcement is based on the extension of the anti-inflation measures already put in place by the brands. The Intermarché group has announced that it will double, from 500 to 1,000, the number of “purchasing power products” on its shelves. Carrefour, for its part, has recorded a further reduction in prices on 500 new products, and Système U is demanding reductions on 900 labels.
But The terms of these “anti-inflation” operations in supermarkets (products concerned, blocked or reduced prices, temporary promotions, etc.) remain at the discretion of the brands. For the moment, no official list of the 5,000 products mentioned by Bruno Le Maire has been communicated by the Ministry of the Economy. Bercy, however, promises that Fraud Repression will carry out checks, in particular to verify that the reductions agreed by manufacturers are reflected on the shelves.
To succeed in reabsorbing more effectively the gap between the real production cost of products and their prices for consumers the government has therefore decided to bring forward the calendar of negotiations for 2024 by a few weeks, and to give stakeholders until January 15 to agree. Unlike Bruno Le Maire’s attempts at incitement, this upheaval of the calendar requires a legislative text: the deadline for negotiations, normally set for March 1, is written into the law. Only the 75 largest manufacturers will be affected by this advancement of the schedule. The thousands of other companies supplying mass distribution will continue to negotiate until March 1.
A decline far from assured in all departments
However, it is difficult at the moment to accurately anticipate the outcome of these negotiations. For Anne-Sophie Alsif, price reductions should be implemented, in particular to counter the phenomenon of decline in consumption observed in supermarkets. At the end of August, the CEO of Carrefour and president of the Federation of Commerce and Distribution, Alexandre Bompard, warned about the “tsunami of deconsumption” which he says he is already observing, and which could get worse if food inflation continues.
In order to offer the best offers to their customers, the boss of the large distribution sector has also requested a one-year moratorium on the Descrozaille law passed by Parliament in March. This text, which is due to come into force in March, limits promotions on hygiene and care products to 34% of the original sale price. A provision to which Bruno Le Maire also said he was “opposite”judging her “contradictory” with support for household purchasing power. The minister nevertheless leaves it to parliamentarians to request a suspension of the measure that they themselves proposed and adopted.
For their part, manufacturers affirm that the decline in certain raw materials is not necessarily significant, and that their production costs are far from having fallen everywhere. The milk and charcuterie sectors have asked to be exempted from the progress of the negotiations, assuring that they cannot afford to lower their prices at the moment. Other manufacturers even argue that early negotiations could lead to increases on certain items. “There will be cases where there will be + 10%, others where there will be -2% “advances with RMC Richard Panquiault, who represents multinationals like Ferrero or Kellogg’s. “Sugar, pork, rice, lentils, tomatoes… We still have food inflation which is strong”justifies, on the radio microphone, Jérôme Foucault, spokesperson for Adepale, which represents companies producing processed food products.
Whatever the results of these exchanges, the effect on consumers’ wallets is unlikely to be immediate. E n depending on the renewal of products on the shelves, “he will take at least three months to observe price variations on the new stocks traded”, says economist Anne-Sophie Alsif. Ultimately, the Ministry of the Economy is also considering a “comprehensive reform” and sustainability of negotiations. A wish repeatedly expressed by the boss of Système U, Dominique Schelcher, who pleads for discussions throughout the year.