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French food companies to re-negotiate with retailers on pricing

Pressure from the French government for the country’s food manufacturers to lower prices has led to companies agreeing to earlier-than-planned negotiations with retailers.

The announcement by Finance Minister Bruno Le Maire came after he met with food industry representatives and days 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.

Negotiations are now expected to take place before the end of this month.

Food companies and retailers agreed to an average 10% increase in annual price negotiations in March but with French food inflation reaching 15% in recent months the government stepped in. It called on the 75 companies that make 80% of French food to renegotiate terms if selling prices have risen more than the 10% agreed and if at least one of their input costs had fallen more than 20% since 1 March.

Small- and medium-sized companies (SMEs) are not covered by the agreement.

In a statement confirming the deal, the French food industry body ANIA said: “With this major gesture, professional organisations are committed to the fight against inflation, which penalises consumers.”

It added: “Beyond these renegotiations, manufacturers and distributors will also be able to strengthen commercial promotions to contribute to the reduction of prices on the shelves.”

The agreement with food manufacturers comes two months after France reached a deal with retailers to set the “lowest possible price” on a range of products in a battle against inflation.

Dubbed the “anti-inflation quarter”, Le Maire, said the pact, which lasts until June, would represent “several hundred” millions of euros which would come out of retailers’ margins.

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