The annual negotiation of tariffs between manufacturers and distribution chains threatens new price increases for the consumer
In France, the agricultural show is celebrated these days. President, Emmanuel Macron, inaugurated it last Friday and took advantage of the occasion to ask the French supermarkets for an effort to contain prices. He did it at the most opportune moment, just when the deadline for the industry (manufacturers and brands) and supermarkets to agree on the new rates for this 2023 was about to run out.
This year, due to inflation, these trade negotiations are being much tougher. To the increase in food prices in France (14% in February) will be added in the coming months the impact that this new price scheme will have on the pocket.
In France, by law, both parties renegotiate these rates annually. The price that each supermarket pays to the industry for the different products of the big brands that it has in its stores is set. Increases or decreases are applied depending on the cost of agricultural production, energy, etc. From there comes the price that the consumer pays. These negotiations They began in autumn and yesterday the deadline to close them ended. Last week barely half had reached an agreement.
In this tug of war, providers claim increases to offset escalating costs who are suffering The supermarkets criticize that the manufacturers raise an exaggerated increases and not always justified. average of 10%according to the general director of the French employers’ association of the sector, the Federation of Commerce and Distribution (FCD), Jacques Creyssel.
French media give the example of Coca Colawhich on Wednesday, when the term to close the agreement ended, asked the distributors for a rise in the 14%when they believe that only one 7% is justified.
The government alert
The French expect a “red march” (as it has been baptized), because they fear that their purchases will skyrocket from now on. What is not yet known is how much. This Thursday the experts pointed out that the distribution will apply between 4 and 7% (absorbing the rest in its margin), which means adding fuel to the price fire.
The president of the Leclerc supermarket chain, Michel-Edouard Leclerchas explained that these increases “they will be passed on until Julybecause it takes a few months for them to be applied on the shelves”. The French food chain law (Egalim II Law) ensures that a fair price is paid to farmers and obliges retailers to accept increases linked to the evolution of the price of raw materials, for example.
“There should not be a red march,” warned the Minister of Economy on Thursday, Bruno the Mayorwho recalled that the State “protects the consumer” against inflation, but recalled that “everything cannot be paid for by the State”. The minister, who thus puts more pressure on distribution, has indicated that “before March 15” a “collective agreement” will be reached on prices to “share the impact of inflation.” He has not mentioned whether he will try to agree on a shopping basket with basic products with a frozen price, an idea proposed some time ago by the Minister of Commerce.
This commercial conflict, with the repercussions it has on the shopping cart, opens a new economic front in the Emmanuel Macron government, already under pressure from the contested and unpopular pension reform. Macron is aware that purchasing power, pocket money, is one of the issues that most concern the French and is, in fact, the weapon used by Marine Le Pen in her campaign to beat Macron in the last presidential elections in April, in which he was finally re-elected.
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