French retailers may seek deep price cuts from food producers

Supermarket groups in France could demand price cuts of 2% to 5% from food manufacturers in negotiations set to kick off soon, the head of retailer Les Mousquetaires told legislators on Wednesday in a roundtable with executives.

French retailers have criticised consumer goods giants such as Unilever and Nestlé for price hikes they say are unjustified. The government has also put pressure on the consumer goods makers to cut prices.

Lower raw material and energy costs mean producing food and other consumer goods is less expensive, said Les Mousquetaires president Thierry Cotillard. Prices agreed in negotiations should reflect that.

“We should probably be able to demand that the big (consumer goods) groups cut prices by between 2% and 5%,” he said.

Cotillard said the group’s business in Portugal had managed to negotiate lower prices with consumer goods firms, because price talks there are not restricted to an annual window. Les Mousquetaires operates in Portugal under the Os Mosqueteiros banner.

“Our request, to be able to negotiate throughout the year like our friends in Portugal and Spain, strikes us as perfectly legitimate,” said Cotillard.

France, which has regulations dictating an annual window for price negotiations — from December 1 to March 1 — is considering a law that would bring forward the negotiations, aiming for talks to begin soon and wrap up by January 15.

“We are asking you, in the relationship we have with consumer goods groups, to trust us and to let us negotiate,” Carrefour CEO Alexandre Bompard told legislators.

MPs also questioned Systeme U CEO Dominique Schelcher and E Leclerc co-president Philippe Michaud in the parliamentary committee on economic affairs.

Representatives of the food industry, speaking to MPs after the retail executives, argued that production costs remain high and manufacturers have absorbed a significant part of the inflationary shocks.

Miloud Benaouda, board member of food industry lobby group ANIA, told legislators that campaigns to publicly shame companies such as Nestlé and Unilever for “shrinkflation” were unhelpful and could dissuade multinationals from investing in France.

MPs also asked about buying alliances, which some supermarkets use to negotiate prices jointly with peers at the European level, and whether they enable retailers to evade French regulations on pricing.

France’s senate said previously in a report that such alliances enable retailers to circumvent French law.

Michaud denied that, saying: “We buy as a group, not to evade any law, but in order to have sufficient clout against manufacturers.” E Leclerc is part of the Eurelec buying alliance, with German retailer REWE Group.

Reuters