Denis Charlet / AFP
The discussion between distributors and suppliers with a turnover of less than 350 million euros ends this Monday. But they don’t necessarily mean massive price cuts on the shelves.
End of first round. Negotiations between supermarket brands and some of their agri-business suppliers ended this Monday evening with the usual skirmishes and no big and sweeping price cuts being proposed. The government passed legislation in November to bring forward by a few weeks the end of the negotiation period between distributors and their suppliers, hoping for a swifter response to declines in certain wholesale prices, whether oil or wheat but also energy.
Exceptionally, therefore, companies must agree more quickly on sales terms for 2024 for suppliers with a turnover of less than 350 million euros by this Monday evening and no later than January 31 for the largest suppliers (Lactalis, Herta, Bonduel, etc.). ). “The negotiations went well, the French businessmen were right», declared Michel-Edouard Leclerc, E.Leclerc, media representative of the leader in mass distribution on TF1. “I come to you with a rather positive outlook on these negotiations.»
“Prices will come down and we will reduce food inflation to 2 or 3% per year.», after an average price increase of more than 20% in two years, added Michel-Edouard Leclerc. Conversely, manufacturers have difficulty digesting sometimes having to sell at lower costs than last year, arguing that their share of production costs is still rising. In a press release, the Association of Produced Food Products Companies (EDEPALE) claims to note “Requests for unreasonable price reductions are disconnected from cost variations incurred by firms“
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“No room for maneuver”
According to the organization, SMEs and ETIs (medium-sized enterprises) in the food sector requested the price hike.moderate (less than 4.5% for the vast majority) and strongly linked to increases in agricultural and industrial raw materials, energy as well as wages, services (banks, insurance, etc.), interest rates and storage costs“Edapple”concerns“but”Egalim about the future of law“, which was to secure the income of the farmers,”Because large-scale distribution shows less sensitivity to the protection of agricultural raw materials during these negotiations“
The head of the National Federation of Dairy Industries (Fnil), which protects the interests of processors (excluding cooperatives), decides “Unacceptable and illegal» that supermarket shoppers ask “Reduction at any cost» For Dairy SME. Francois-Xavier Huard, president and CEO of the organization, cited Carrefour and Intermarche as underperformers. According to him, these negotiations resulted in “Mechanically reduce the purchase price of milk» For breeders. “Milk purchase is a little more than 50% of the cost of the dairy, leaving no room for manoeuvre“, he justified.
Commercial negotiations take place every year to determine the terms of sale (purchase price, shelf space, promotional calendar, etc.) for the majority of products sold in supermarkets and usually end on March 1st. They are traditionally more tense with the biggest players, often multinationals. Carrefour gave an example last week by singling out its suppliers PepsiCo, the maker of famous sodas but also Lenny’s chips and Lipton sweet tea, which it accuses of asking for “”Unacceptable price increase“
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