1 Each label is the result of long discussions
To maintain their market share, some large brands do not hesitate to break the law. Several companies of the Intermarché brand will thus have to appear before the Paris Commercial Court for “abusive commercial practices” vis-à-vis 93 of their suppliers. The sanction requested this week by Bercy amounts to 150 million euros! Previously, E. Leclerc, Carrefour, Système U had been, in turn, in the crosshairs of justice.
What the Le Goff family is totally unaware of when they push their cart on the shelves of their favorite Breton supermarket. Because the trench warfare takes place behind the scenes. And each label is the result of long discussions. Every year, between early October and late February, food manufacturers negotiate the prices (and volumes) of their products with major brands such as Carrefour, Leclerc, Casino, Intermarché, Auchan, Système U and other Lidl. On the shelves, not a sausage, detergent or yogurt that has not escaped the annual trade negotiations.
2 Manufacturers contest tariff deflations
Bitter, the boss of an emblematic Breton SME, says: “In our products, we use sunflower oil, the cost of which has dropped for us from 9,000 euros to 13,500 euros in a short time. The paper for packaging is on the same curve… However, some large brands ask us for price deflations totally out of step with our production costs. Two weeks before the end of the annual negotiations, we have still not signed with three of them who ask us to lower our prices by 3% ”. The leader will remain anonymous out of prudence. Some companies have found themselves bloodless for not having negotiated their rates sufficiently or having been pushed off the shelves.
Despite the legislative framework – including the Egalim law – which aims to pacify relations between large-scale distribution and its suppliers, dairies, cured meats, biscuits and other manufacturers of prepared meals, “each year returns the psychodrama”, comments Jacques Creyssel. The president of the Federation of Commerce and Distribution (FCD) underlines that “this year, more than 90% of contracts have already been signed with SMEs. Above all, there are the biggest contracts concerning sodas, drugstore, perfumery and hygiene ”.
3 The agricultural sectors are on their toes
Although absent from the negotiations on processed products, farmers have stepped up to the plate in recent days. “The increase in the price of feed for chickens is 22.3% in one year. Or a penny per egg. Supermarkets are asking their suppliers for a reduction of 4%… We have chosen to distribute our eggs to consumers ”, explained Frédéric Chartier, president of the egg commission at the UGPVB (Union of meat producers’ groups in Brittany), after the interventions of breeders in hypermarkets of Rennes and Nantes on Thursday. “Other cross-sector awareness campaigns are planned for next week,” warns Frédéric Chartier.
Patrick Benezit of the FNSEA also insists on the “exceptional increase in raw materials” putting breeders in difficulty since they cannot pass them on to their selling prices to processors – slaughterhouses and industrialists – who themselves themselves, negotiate bitterly with the big names. “With inflation at 2% for two years and exceptional turnover in 2020, the position of large-scale distribution is indecent! “. Response from the FCD: “If food is up 4% in 2020, the rest is in decline.”
4 What avenues for improving and pacifying negotiations?
Transparency in the development of prices at the industrial level, this is what Jacques Creyssel demands, who throws the ball into the camp of the transformers. The FCD is also in favor of more mediation in order to calm the negotiations. As well as for multi-year contracts which would avoid reopening hostilities each year. While planning to review prices in the event of a significant increase in production costs. At the Ministry of Agriculture, Julien Denormandie urges the parties to calm things down and increase the controls of the DGCCRF (Directorate General for Competition, Consumption and the Repression of Fraud).
For his part, economist Olivier Mevel recommends securing the agricultural share in the price by asking producer organizations to set production costs and volumes. This would protect agricultural income in the construction of the consumer price. There is a year left to do better.
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