2023-08-31 17:05:59
After meetings with players in the French food chain, the Minister of the Economy announced a price freeze on new products and an obligation for distributors to pass on the price reductions granted by their suppliers. Negotiations between manufacturers and supermarkets for 2024 will be anticipated.
Visibly sensitive to criticism of the State’s inability to act in the face of rising food prices and consumer products, the Minister of the Economy, whom some had ironically nicknamed “Bruno asks”, decided to switch to the offensive in a more concrete way. After two days of meetings with large retailers and food manufacturers, Bruno Le Maire announced at midday the price freeze on 5,000 products “which will not move or drop”, in the words of the minister. That’s twice as much as before. The list of products concerned will, however, be set by manufacturers and large retailers, who will therefore have complete freedom to choose the departments concerned by this anti-inflation operation, which should last until the end of the year.
“The objective” of the government is to obtain “lower prices from January 2024”, declared Bruno Le Maire on France 2, following meetings with the actors of the French food chain which were held in Bercy Wednesday August 30 and this Thursday August 31. Main drivers of inflation in recent months, food prices jumped 11.1% year on year in August, a slower rise than in July (12.7%) but still very strong.
At the same time, the agreement reached this Thursday morning between Bercy and the merchant sector provides for an obligation for Leclerc, Auchan, and its competitors to pass on the discounts granted by their suppliers in the retail price. Clearly, there is no question for distributors to inflate their profit margin on the backs of suppliers and consumers. Compliance with these commitments will be monitored by the Directorate General for Competition and Fraud Prevention, whose modest staff cannot, however, inspect each gondola end and each invoice from supermarkets in France and Navarre.
«Name and shame»
On the industrial side, Bruno Le Maire is betting more on the “name and shame”: he pinned industrialists who, in his eyes, “might do much more” once morest soaring prices, citing by name the giants Unilever, Nestlé or Pepsi. On the other hand, he praised manufacturers who have “played the game” by announcing price reductions, such as the pasta specialist Barilla or the oil giant Avril.
In order to point the finger at bad retail practices, Bruno Le Maire also announced the future obligation to mention on packaging the use of “shrinkflation” – this technique rarely detected by consumers which consists of not changing the price but to reduce the quantity of product. For example, bricks of fresh fruit juice that go from 1 liter to 90 cl… From now on, it will be necessary to clearly announce the color to consumers. Finally, to accelerate any future price reductions, the window for trade negotiations between manufacturers and large retailers, normally scheduled for the end of the year, will be brought forward by three months. Discussions will begin in October and should be concluded by January at the latest. It is during these negotiations that the price of the products put on the shelves for the following year will be fixed. If there must be a downward movement in the labels, that is when it will be decided.
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