Baguette at 29 cents: why Leclerc’s commercial operation is causing such an outcry

No sooner had the announcement made by the large distribution chain than the outcry was not long in coming: the entire wheat sector castigated on Wednesday January 12 the sale by the Leclerc group of a baguette at 0.29 euro, denouncing a campaign “demagogic and destructive of values”. Michel-Edouard Leclerc said on Tuesday that he was freezing the price of baguette bread in the group’s supermarkets at 29 euro cents – even up to 23 cents in some stores – for at least four months, saying he wanted to defend the purchasing power of the French, while inflation continues to climb.

Far from these stated ambitions, cereal farmers, millers and bakers see it more as a marketing coup. These professionals criticized in a joint statement, alongside the FNSEA, the first agricultural union, “prices deliberately destroying values” and a step “demagogic” according to them. They accuse the brand of betting on this price cut to attract customers to the detriment of production costs, while wheat prices have increased by around 30% in one year and the context is particularly tense, at the hour of annual negotiations between producers and distributors.

An argument taken up by several presidential candidates. “It’s extremely dangerous because we know that the Leclerc centers will catch up on the rest of the caddy”, then selling “products that will be more expensive and therefore they will make up for it, they will make their margin elsewhere”, castigated the LR candidate Valérie Pécresse this Thursday during a trip to farmers in the Doubs, reports BFM. “It’s obviously a sale at a loss” which will cause “the ruin of bakers and pastry chefs who can only pass on energy increases in the price”, said LFI leader Jean-Luc Mélenchon in the National Assembly.

In reality, the company cannot sell at a loss, because selling a product cheaper than one bought it is prohibited by law. While there are a few exceptions to this rule, the sign operation is not one of them. Selling at a loss is authorized only in the event of liquidation at bargain prices of the stocks of a store which is closing, for products which will soon expire, or even within the framework of sales, organized twice a year and including those of winter began on Wednesday, details journalist Thomas Jarrion in the TF1 1 p.m. video at the top of the article.

Leclerc could on the other hand sell these baguettes at cost price, that is to say without generating any margin, which is authorized by law. A strategic choice also recently adopted by the big chains regarding fuel, but also masks and self-tests. The objective is to attract customers to a store, by encouraging them to buy other products once there, for which traditional margins are applied. According to the Price Observatory of the Familles Rurales consumer association, the average basket of French people climbs to 140 euros in supermarkets. “The seller remains a winner”, analyzes Thomas Jarrion.

Moreover, it seems difficult for the brand to maintain these prices while offering a quality baguette, while production costs continue to soar: the price of a tonne of wheat has gone from 210 euros in August 2018 to 273 euros in January 2021, says LCI economic journalist Pascal Perri in the video below. In addition, of the 90 euro cents that a baguette costs on average according to INSEE, around 60% of the price is donated in salaries and social security contributions for bakers, while 20% of the sum is allocated to payment for raw materials. , according to an Ifop poll. “You can’t do miracles, there is no magic wand”, annoys the columnist.

“It’s very generous on the surface, but in reality it hits the rules of economics. The price is an indicator of value: when you crush it, you send the wrong signal to the consumer, as if your product was worthless “, he continues. “The know-how and quality of the French baguette are about to be recognized by UNESCO”, recalls the FNSEA in its press release.

Competition is thus ruthless for bakers, who are faced with an avalanche of expenses. “We sell the baguette for one euro, and we have 15 to 20 cents left once we have paid the baker, the energy, the raw material which is increasing, the vendors, the rent, etc.”, list in the report of 13H of TF1 below Clément Buisson, artisan Parisian baker. “When we see that Leclerc is going to sell a baguette for 29 cents, it’s absurd”, he shouts.

The producers fear for their part that their remuneration will suffer from this decision, which would devalue their work. “The EGalim law was intended to ensure fair remuneration for producers, but I do not see how Leclerc can continue to respect it”, laments in the report Sébastien Dromigny, cereal farmer from Seine-et-Marne.

“Leclerc is the champion of cut prices, he is responsible for many bankruptcies among food suppliers who make French quality products, it’s unacceptable”, reacted for her part this Thursday on RTL Christiane Lambert, boss of the FNSEA, considering that Michel-Edouard Leclerc is “accustomed to populism and demagoguery” and that he “love it”.

The management of the sign does not, however, backtrack, on the contrary. “E.Leclerc claims to be able to lower its margins in this period of overheating”, replied on Twitter Michel-Edouard Leclerc this Thursday, arguing that his stores already offered a 1st price baguette whose price “oscillates between 0.24 and 0.32€”. “This controversy sucks”, he dropped, assuring that the operation “is acclaimed by consumers” and castigating his detractors who, according to him “live on another planet”, at a time of galloping inflation.

The president of the group also tried to reassure the producers: “To farmers who are worried, I tell them that even with a 30% increase in the price of wheat, the impact is only 1 cent on the final price”, he said.

A little earlier, the brand assured the Figaro than “the decision to offer its customers a baguette at 29 cents has no impact on the purchase price of raw materials (…) and it is 100% financed by the stores, which take on their margins to offer this price”. “In no case does this action have a link or an impact on the purchase prices to suppliers”, hammered the supermarket chain.