French supermarkets to ask for up to 5% price reduction from food suppliers.

Supermarket groups in France are gearing up to negotiate price reductions of 2% to 5% with food manufacturers, according to Les Mousquetaires President, Thierry Cotillard. The French retailers have been expressing dissatisfaction with the price hikes imposed by consumer goods giants such as Unilever and Nestle. Moreover, the government has also exerted pressure on these companies to bring down their prices.

Cotillard highlights that lower costs of raw materials and energy have made production of food and consumer goods less expensive. Consequently, these cost savings should be passed on to the consumers in the form of reduced prices. Cotillard believes that the negotiations between supermarkets and consumer goods companies should result in price reductions ranging between 2% and 5%.

Drawing on the experience of Les Mousquetaires’ operations in Portugal under the Os Mosqueteiros banner, Cotillard suggests that negotiations throughout the year would be more beneficial. In Portugal, where talks are not restricted to an annual window, the company managed to secure lower prices from consumer goods firms. Cotillard argues that the French supermarkets’ request to negotiate year-round, like their counterparts in Portugal and Spain, is entirely reasonable.

France currently has regulations that dictate an annual window for price negotiations, stretching from December 1 to March 1. However, there are discussions in progress regarding a potential law to bring forward these negotiations. The aim is for talks to commence soon and conclude by January 15.

Carrefour CEO, Alexandre Bompard, emphasized the importance of trust in the relationship between supermarkets and consumer goods groups during the parliamentary committee on economic affairs. Bompard urged the consumer goods companies to have faith in retailers’ negotiating capabilities and allow them the freedom to negotiate prices.

Lawmakers also questioned representatives from Systeme U and E Leclerc during the committee. The food industry, speaking after the retail executives, argued that production costs remain high and that manufacturers have already absorbed a significant portion of the inflationary shocks. Miloud Benaouda, a board member of the food industry lobby group ANIA, expressed concerns about campaigns aimed at publicly shaming companies such as Nestle and Unilever for “shrinkflation.” Benaouda argued that such campaigns are unhelpful and could discourage multinationals from investing in France.

Experts predict that consumer goods firms will face increasing pressure across Europe to reduce prices. In addition to this, authorities are stepping up their scrutiny of retailers. For instance, in Greece, supermarkets are now required to submit their suppliers’ price lists for essential goods to the authorities in an effort to curb profiteering.

The issue of buying alliances was also addressed during the committee hearing. Some supermarkets use these alliances to negotiate prices jointly with other European retailers. However, concerns were raised about whether these alliances enable retailers to bypass French pricing regulations. France’s Senate has previously reported that such alliances allow retailers to circumvent the country’s laws. E. Leclerc co-president, Philippe Michaud, denied these claims, asserting that their participation in buying alliances is aimed at giving them more bargaining power against manufacturers rather than evading any laws.

Overall, the supermarket groups in France are seeking to negotiate price reductions with consumer goods manufacturers, aiming to pass on the cost savings to consumers. While there are debates around the timing and regulations of these negotiations, it is evident that both the retailers and the consumer goods firms are under pressure to strike a balance between profitability and affordability.

French supermarkets to ask for up to 5% price reduction from food suppliers.

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