The Minister of Economy and Finance Bruno Le Maire leaving the Elysée Palace on March 28, 2023 in Paris (AFP/Archives/Ludovic MARIN)
The government has asked manufacturers and supermarkets to get back around the negotiating table to lower prices on the shelves “whenever this is objectively justified”, according to a letter revealed by Les Echos Thursday evening and consulted by AFP .
The Minister of Economy Bruno Le Maire and the Minister Delegate for Trade Olivia Grégoire have asked supermarkets and their industrial suppliers to “voluntarily register” in a “perspective of infra-annual renegotiation of contracts” determining the conditions sales of foodstuffs that ultimately fill the shelves of supermarkets.
Objective: “that the transfer prices be revised downwards each time this is objectively justified”, write the ministers who ask the manufacturers to “examine with the greatest attention the requests for renegotiation which will be transmitted to them from the first signs of falling inflation upstream”.
“We urge distributors to ensure that any price reductions that may result from this renegotiation are returned to consumers when the time comes, in full and without delay”, say Bruno Le Maire and Olivia Grégoire in this letter addressed in particular to the Ania, the main employers’ organization in the food industry, and at Ilec, representing many manufacturers selling under a national brand (such as Nestlé, Danone or L’Oréal).
L’Ania told AFP on Thursday evening that it had “taken note of this letter which recalls what is already provided for in the contracts”. They include, according to her, “renegotiation or revision clauses” which provide for renegotiation if the price reductions are “proven and objectified for companies”.
The government announced at the beginning of March that a reopening of these negotiations would take place during 2023, “so that the drop in wholesale prices that we observe on the markets” could “translate” also into the shelves, said Bruno Le Maire.
Each year, the supermarkets negotiate with their suppliers the conditions under which they will buy from them, for the coming year, their production which will fill the shelves of the stores.
The latest negotiations to date, completed on March 1, painfully resulted in an average increase of some 10% in the prices paid by supermarkets to manufacturers, to take into account the increase in their production costs (energy, transport, materials raw materials, packaging, etc.), according to the two camps.
In mid-March, the president of System U Dominique Schelcher had called on the government to reform this system, wishing that the discussion be “permanent between producers and traders to take into account the evolution of the price of raw materials”.
© 2023 AFP
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