Whatever the outcome of the negotiations, the prices on the shelves will increase further. The finding is clear, as trade negotiations between supermarkets and their agro-industry suppliers come to an end on Wednesday, March 1. The discussions are stormy while the price of the majority of products sold in supermarkets, from the leader E.Leclerc to Casino via Carrefour, depends on the purchasing conditions that will be negotiated.
Supermarkets are free from the price of the foodstuffs they sell to the consumer, provided they respect a minimum margin of 10% provided for by law. But they must negotiate each year with the agro-industry the price and the conditions of sale for yogurts, meats or biscuits. Their interest is to obtain the best conditions to be able to be competitive on their prices while protecting their profit margins. This is all the more crucial this year as store operating costs soar, especially electricity bills.
Except that manufacturers, too, are facing inflation in their production costs, from agricultural raw materials to packaging, and have been asking supermarkets for months to buy their more expensive products.
At the Salon de l’Agriculture on Saturday, Emmanuel Macron called on distributors to “participate in the effort”. “We can’t ask for an effort” from farmers, given the increase in energy and “various inputs”, he said, and agro-industrialists, “many SMEs all over the territory”, ” have made a tremendous effort in recent years.”
For their part, supermarkets cry out for the lack of transparency, and protest against requests for exaggerated increases, the boss of Carrefour, Alexandre Bompard, even qualifying some of them as “delusional”.
Whatever the outcome of the negotiations, the prices on the shelves will increase further. Already, because the supermarkets committed in December – in a non-legally binding document – to “take into account, without negotiating them, the cost increases suffered” by their suppliers, especially the smaller ones. Then, because the requests for increases are “anything but delusional”, according to Jean-Philippe André, president of the agri-food lobby Ania. “Raw materials are more expensive than last year, and we have purchased energy at current rates for the whole year. »
And more than a “red month of March”, there “will be more food inflation […] throughout the first half of 2023”, predicted the president of System U, Dominique Schelcher, Monday on France Inter .
Proof of these tensions, only one in two manufacturers had signed all their contracts with their distributor customers in the middle of last week, an unusually low rate a few days before the close. “We are concentrating the negotiation quarrel over a few days and that is obviously very bad,” commented the Minister of Agriculture, Marc Fesneau, on Public Sénat on Monday, noting that “there has been a delay in taken” in these negotiations.
The distribution ensures that it cannot absorb these price increases alone and will therefore have to pass them on to its customers, who have already suffered 12% food inflation in 2022 and are themselves facing the increase in gas or fuel. To this food inflation already suffered, an additional “about 10%” will be added “in the weeks and months to come”, according to Dominique Schelcher.
The government is trying to provide answers with an anti-inflation basket project, a selection of references with the best quality/price ratio, which is however the subject of numerous criticisms and uncertainties.
French households did not wait to adapt, turning to roughly equivalent but more economical products, such as first prices, and to brands perceived to be cheaper. A quest for the lowest price which makes it all the more crucial for supermarkets to obtain the best possible purchasing conditions in order to display lower prices than the competition. If prices rise too much, the entire agri-food chain is exposed to a drop in volumes sold, because customers would deprive themselves of products that have become too expensive.
