Despite French government pressure to reduce prices and amid easing cost inflation, the country’s largest CPG manufacturers are not “playing the game”, according to grocery major Carrefour.
Speaking to analysts after the release of Europe’s largest retailer’s first-half results, CEO Alexandre Bompard said negotiations with manufacturers have turned out to be “cosmetic” in regard to permanent price reductions despite supply-chain costs linked to raw materials and energy decreasing.
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“Most of the discussions with suppliers so far have resulted in promotional campaigns,” he said. “We have seen very little improvement in purchasing conditions for permanent prices.”
The French government last month ordered the country’s 75 biggest food and beverage producers to cut prices. The move was welcomed by grocers, which had criticised consumer goods firms for what they saw as unjustified price hikes.
French finance minister Bruno Le Maire said manufacturers had agreed to discount the price of hundreds of basic grocery items including pasta, sunflower oil and chicken from this month.
But Bompard suggested not all manufacturers were acting.
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By GlobalData“To be honest, for the moment I think I would say that suppliers are not really playing the game,” he said. “It’s more a cosmetic negotiation os there is no impact on permanent prices.”
Bompard said negotiations had been more positive with private-label suppliers and, as a result, it has been able to pass on price reductions to consumers.
“But, concerning the national brands, for the moment there is nothing substantial to announce,” he said. “Until the next negotiations next year, we will continue to be in an inflationary environment.”
It was revealed in May that it was pressure from the French government that led to the manufacturers agreeing to earlier-than-planned negotiations with retailers.
Le Maire had met with industry representatives after he threatened to either use tax measures to recover what he considered to be excessive profits or name and shame companies if they did not accept talks with grocers.
Just Drinks has asked the French Ministry of Finance to respond to Bompard’s claims.
The Association Nationale des Industries Alimentaires (ANIA), which represents French consumer goods companies, has also been asked for its response.
