Food prices: end of first negotiations on 2024 prices

End of the first round. Negotiations between supermarket brands and some of their agro-industry suppliers ended this Monday evening, with the usual skirmishes and without presaging massive and widespread price reductions. The government passed a law in November to bring forward by a few weeks the end of the negotiation period between distributors and their suppliers, hoping for a quicker reflection on the shelves of reductions in certain wholesale prices, oils or wheat but also energy.

Exceptionally, therefore, companies must agree more quickly on the conditions of sale for 2024, by this Monday evening for suppliers with less than 350 million euros in turnover and no later than January 31 for the largest suppliers (Lactalis, Herta, Bonduelle, etc.). “The negotiations went well, the French manufacturers were rather correct,” declared the media representative of the leader in mass distribution, E.Leclerc, Michel-Édouard Leclerc, on TF1. “I come to you with a rather positive vision of these negotiations.”

“There will be pockets of price reduction and we will reduce food inflation to 2 or 3% per year,” added Michel-Édouard Leclerc, after average price increases of more than 20% in two years. Conversely, manufacturers have difficulty digesting sometimes having to sell less expensively than last year, arguing that part of their production costs are still increasing. In a press release, the Association of Processed Food Products Companies (Adepale) claims to note “requests for price reductions that are unreasonable and disconnected from variations in costs borne by companies”.

According to the organization, SMEs and ETIs (mid-sized companies) in the food sector had requested “moderate” price increases (less than 4.5% for the vast majority) and strictly linked to variations in the cost of raw materials. agricultural and industrial, energy as well as increases in wages, services (banks, insurance, etc.), interest rates and storage costs. Adepale is also "worried" about "the future of the Egalim laws", which were to secure farmers' income, "since large-scale distribution demonstrates during these negotiations a low sensitivity to the protection of agricultural raw materials".

The head of the National Federation of Dairy Industries (Fnil), which defends the interests of processors (excluding cooperatives), deemed it “unacceptable and illegal” that buyers from large retailers are demanding “reductions at all costs” from dairy SMEs. The organization's president and CEO, François-Xavier Huard, cites Carrefour and Intermarché as poor performers. According to him, this negotiation risks resulting “mechanically in a reduction in the purchase price of milk” for breeders. “The purchase of milk represents a little more than 50% of the dairy's costs, there is no room for maneuver,” he explained.

Commercial negotiations take place each year to determine the conditions of sale (purchase price, shelf space, promotional calendar, etc.) for a large part of the products sold in supermarkets, and usually end on March 1st. They are traditionally more tense with the biggest players, often multinationals. Carrefour gave an example the previous week by singling out its supplier PepsiCo, manufacturer of the famous soda but also Lay's crisps and Lipton sweet tea, which it accuses of asking for "unacceptable price increases".