Resumption of negotiations between manufacturers and distributors: towards lower prices in supermarkets?

Romain Rouillard / Photo credit: RICCARDO MILANI / HANS LUCAS / HANS LUCAS VIA AFP 19:18 p.m., May 17, 2023

Faced with pressure from the government, the industrialists finally gave in. Meeting this Wednesday morning in Bercy around the Minister of the Economy Bruno Le Maire, the giants of the agri-food have agreed to return to the negotiating table with supermarkets. These annual talks, intended to set the price of products sold on the shelves for a year, ended last February with an average increase of about 10% in the rates paid by the brands to manufacturers. At the time, the latter were justified by invoking the increase in production costs (raw materials, energies ...) but today, some indicators show less prohibitive prices. During his interview with the 20H of TF1 Monday, Emmanuel Macron has precisely pointed the finger at these industrialists who would have "quickly passed on the increase" of prices but "less quickly passed on the decrease".

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Normally, prices are set for a period of one year, without the possibility of renegotiation. But inflation decided otherwise. Can this breach of the law lead to the long-awaited drop in prices on the shelves? "It's certain, yes," says Rodolphe Bonnasse, an expert in mass distribution. Because distributors have more than one trick up their sleeve to convince manufacturers, he says: "Retailers can question the prices offered by large groups because they too manufacture and sell products to their private labels. So they can very well say to the industrialists 'we saw that the price of wheat had been halved, so how do you justify this price increase?'"

A goldsmith's work

However, the negotiations promise to be tough. Because while some raw materials have tended to stabilize or even fall, the cost of labor remains very high. A goldsmith's work awaits both parties. "We will have to dissect each line," says Rodolphe Bonnasse. And if price falls should indeed occur, believing in a spectacular inflection seems very utopian. "When you buy a baguette, 7% of the price corresponds to the price of wheat. So even if the latter has been halved, it will only have an impact on 7% of the price. Instead of paying one euro for your baguette, you will pay 97 cents," says the specialist. Clearly, the return of prices in force before the outbreak of the war in Ukraine does not appear on the horizon.

Nevertheless, industrialists remain under the tax threat by Bruno Le Maire against the most reluctant of them. "We will use all the instruments at our disposal, including the fiscal instrument, to recover margins that would be undue margins made on the backs of consumers," the economy minister said last week. A strong argument, says Rodolphe Bonnasse who nevertheless wishes to nuance: "They are global giants and on the scale of their planetary vision, the France remains a small country. Even if we remain a significant market for Nestlé or Coca-Cola, these companies will be able to absorb a commercial difficulty in France. On the other hand, if tomorrow we can benefit from a European position on the subject, it would be different," he concludes.