2023-10-10 18:01:06
Inflation has been hitting the wallets of the Swiss for months. In this context, the RTS investigated the margins of mass distribution on food products. Result: food sold for 50%, 80% or even 110% more than what producers are paid.
Three francs and forty centimes: that’s what you paid for a kilo of Swiss zucchini last July, if you did your shopping in a Geneva Coop. Of this amount, 1.50 francs went to the distributor, i.e. a gross margin of 79% – this being understood as the difference between the price paid by the distributor to purchase the merchandise, and the final price paid by the consumer at the store.
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An investigation carried out over several months by the RTS show “A Bon Entendeur” (from 8:10 p.m. on RTS 1) reveals sometimes dizzying price differences between the prices paid by Coop and Migros and the prices displayed on the shelves. Hundreds of price statements and numerous information provided by market players under condition of anonymity make it possible to lift the veil on figures kept secret by the two orange giants, and which farmers rarely dare to speak regarding. “Try to put yourself in the place of the farmer who is often isolated, who has little power, who is alone in the face of a duopoly which has control over all our food. To stand up once morest this duopoly and dare to display its prices, it’s difficult,” explains Vanessa Renfer, breeder and Uniterre union secretary.
>> Read also: The big margins of Coop and Migros on dairy products provoke reactions
Pork producer in red numbers
Jean-Marc Nicolet is one of the rare producers working with major retailers who express themselves openly. Pig breeder in Les Verrières, in the Neuchâtel mountains, his financial situation is critical. “In 2022, for the first time, I am negative, it pisses me off,” he thunders. “We spend hours on our farms, we come at night to load the pigs. All work deserves pay. Overhead costs have not decreased, electricity has increased, feed has increased. I lost 22,000 francs all costs deducted for 2022”, he explains.
Last March, the slaughterhouse paid its pigs 3.20 francs per kilo. To be able to generate an income, Jean-Marc Nicolet estimates that this price should reach 4.50 francs. The cause, in particular, is an unbalanced market since supply currently exceeds demand. Like others, however, Jean-Marc Nicolet denounces the role of Coop and Migros. The orange giants in fact throw all their weight into a commission that sets prices with breeders. Together they constitute the main outlet for Swiss meat and own the two main processors: Micarna is owned by Migros while Coop is the majority shareholder of Bell.
>> The 12:30 p.m. topic on the ABE investigation: Survey on the margins of large distributors in Switzerland / 12:30 p.m. / 3 min. / today at 12:39
A pig sold for more than three times as much
In order to document the combined margin of the two distributors and their respective subsidiaries, the prices of all cuts of pork in the Coop and Migros assortments were recorded. With the help of specialists, these elements were assembled and combined like pieces of a large puzzle. Result of the operation: if, last March, breeders received on average 287 francs per pig, large distributors might resell the pieces for a minimum amount of 1000 francs, or 3.5 times more.
Results which did not surprise Mathias Binswanger, professor of economics at HES Nord-Ouest and author of a study on Swiss meat. “You should know that it is a market that operates in the form of a cycle, with large variations. Sometimes the supply is overabundant and causes prices to plunge. These same prices then rise once more for a few years,” he explains. “Currently, we are in a period where the price is relatively low. But traditionally in this pork market, the price paid to breeders is low and the margin for Migros and Coop is high.”
Record margins on organic meat
His study also showed even greater margins on organic meat. “Migros and Coop pay a higher price to organic meat producers, in order to compensate for the special conditions of these pig farms. But they increase the prices charged to consumers much more. This results in even higher margins for distributors .”
“With the drop in consumption, pork has a special situation: we cannot force customers to eat pork,” comments Tristan Cerf, spokesperson for Migros. “There is an enormous industrial transformation and a whole management of a product which will not be able to be sold in its entirety. Particularly in organic, there is a whole part of the pig which cannot be sold organically because that is not sold organically.”
In writing, Coop responds for its part that the figures given are not correct and that the margin indicated is “far too high”. It specifies: “Additional costs for production steps at Bell, in particular for processed pork, are not taken into account.”
Fish sold for twice as much
In recent years, fish and shellfish farming has been developing and diversifying in Switzerland: trout, perch, sturgeon, shrimp, and even salmon are farmed industrially. In 2019, these fish represented 2,100 tonnes, more than double what is caught in our lakes. And here once more, distributor margins are of concern. On September 1, farmed Swiss perch fillets cost 88.50 francs at the Geneva Coop, 85 francs at Migros. The show “A Bon Entendeur” managed to identify the price at which the two distributors purchased these fish the same week, in fillets and in bulk. Result: on each kilo sold, the Coop’s gross margin reaches 38.50 francs, while that of Migros Geneva reaches 45 francs. In other words: when a customer buys this product, more than half of what they pay goes to Migros.
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According to the president of the Swiss Aquaculture Association, David Morard, these margins are usual in this sector. “Between the producer price and the mass distribution price, we have a multiple of two, therefore 100% margin,” he explains. He adds: “Organic trout, for example, is paid 27 francs per kilo to producers, it is sold for 60 francs at the stall.” For him, these margins have increased in recent years. And here too, Migros and Coop are essential, in particular through their respective subsidiaries: Micarna once more for Migros and Bell Seafood for the Coop.
Regarding the price of perch fillets purchased from Migros Geneva, the company responds: “We are generally at a lower price than our main competitor, but we are actively seeking to improve our pricing and expect to soon arrive at a solution to the benefit of customers”.
This pricing policy has a direct impact on breeders. Because high margins mean high prices in stores. Not enough to encourage consumers to buy Swiss perch fillets. “It simply endangers Swiss production,” explains David Morard. “89 francs per kilo of perch fillet is high, the fish will be difficult to sell.”
Coop once once more considers in writing that the amounts advanced by RTS are incorrect and that the margins calculated are too high.
Yoyo margins on vegetables
On the vegetable side, gross margins were analyzed between mid-June and the end of August on grape tomatoes, zucchini and Swiss eggplant. A series of surveys revealed margins ranging between 20% and 79% (see graph). Example with Migros eggplants on which the observed margin reaches 52%. As for grape tomatoes, this goes up to 60% at the Coop.
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When questioned, Tristan Cerf details the breakdown of Migros’ gross margin on vegetables: “On a product sold for 2 francs, which is purchased for 1 franc from the producer, there is a 1 franc margin. In this franc, there are 50 centimes of store costs (wages, fair working conditions, electricity, rent, etc.), 20 cents of central marketing costs (e.g. advertisements in Migros Magazine), 2 cents of cultural percentage (…), 4 cents of cumulus program, taxes… in the end we arrive at 2 cents in profits. So you can say that Migros is putting 2 cents in its pocket.”
Coop, for its part, underlines in writing the number of manipulations necessary between the purchase of vegetables from the producer and their sale: “A single eggplant passes through around twenty hands before being put on sale in stores. All these stages generate costs. In addition, between the purchase price and the sale price, we must add the personnel costs of our points of sale, the rents of our sales spaces, the IT costs of the ordering and cash register system, as well as operating costs corresponding to the administration, energy and maintenance of our points of sale, without forgetting taxes and other financial costs.”
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Higher margins on organic
Migros has agreed to reveal its figures for an organic vegetable: onions. On this vegetable, it achieves 4 times more gross margin on organic products. Concretely, in March, the orange giant sold its conventional onions in 1 kilo fillets for 1.75 francs, whereas it had bought them for 1.32 francs… Or 43 cents margin.
Organic onions were offered at 5 francs per kilo, while Migros had paid 3.40 francs for them. The margin therefore reached 1.60 francs, 4 times more than the amount pocketed for traditional onions.
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Valérie Demierre, Régis Migy, Raphaëlle Fivaz, Linda Bourget
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