The French government has introduced sweeping measures to shake up the food sector. They are designed to help smaller producers but might also impact heavily upon shoppers who buy big brand names.
There are three major changes. Firstly, from January 1st 2019, retailers can no longer discount products for more than 34% of their retail price. This should put an end to the huge reductions which supermarkets often use to attract customers. Last year, leading French supermarket Intermarché reduced the price of Nutella by 70% resulting in stampedes and fights across the country as customers rushed to buy up large amounts.
Secondly, from March 2019, the amount of promotions which are allowed will be limited to just a quarter of the planned sales. So if a supermarket wants to sell 100 tubs of Nutella, from March, it can only run promotional offers on 25 of them. ‘Buy one, get one free’ offers are now a thing of the past. Big brand names will likely have to work harder to keep customers faithful.
The third change came into effect this month. As of February 1st, 2019 the minimum price of big brand staple products will increase by 10%, affecting products ranging from Pastis, Nutella and Camembert. In small supermarkets, over 500 products out of 13,000 will be affected and in larger supermarkets, 800 products out of 20,000. As reported by French broadcaster 20 Minutes, put plainly if a product was 1 euro, it will now be sold for €1,10. The rationale is that supermarkets attract customers through promotional material of big brand products such as Coca-Cola, Danette, Ricard and Nutella, with whom smaller producers cannot compete. It’s an attempt to help farmers and smaller producers to become more competitive as they are now guaranteed a fair price. Farmers are a powerful lobby group in France and have applied pressure on President Macron to help them battle low margins.
It remains to be seen how far these changes will impact everyday families. Politically, President Macron will earn points from small producers for helping to protect their livelihoods. On the other hand, many people will feel that it’s another knife in a wound which is growing larger every month - France’s Gilets Jaunes protesters are still blocking roads every Saturday demanding tax reductions and improvements in the daily life of French citizens who cannot afford increasing food and petrol prices. Le Parisien reports (in 20 Minutes) that the average basket of food might increase by 7% but it really does depend on how far customers stick to big brand names and also on the strategy of the larger supermarket chains. Intermarché, Carrefour and Leclerc, the biggest chains, may see this as an opportunity to really push their own brand, private label goods at a lower price, which may in turn have negative economic knock-on effects on the SMEs (small to medium sized enterprises) which manufacture them.
