Supermarkets blaming logistics for high prices

By James Frear

The government has once again pointed the finger on Thursday at the responsibility of food retailers, some of them being accused of abusing “logistics penalties”, which they impose on their agro-industrial suppliers when they do not deliver their products on time.
Noting that the inflationary context of the costs of energy, transport or raw materials generates “unprecedented tensions on the companies of the food-processing industry”, whatever their size, the government asked the signs of the large distribution a “moratorium on the logistic penalties”. This statement, signed by the Minister of Agriculture Marc Fesneau and the Ministers Delegate for Industry Roland Lescure and Commerce including Olivia Gregoire, refers to “reported and observed abuses of several signs of large-scale food distribution.

The FNSEA denounced an attitude “without faith nor law” of certain distributors
In early September, the powerful agricultural union FNSEA had called for the opening of an investigation by the Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF) on logistics penalties, denouncing an attitude “without faith or law” of some distributors when they apply these sanctions. The Ministry of Agriculture had then estimated that some distributors were diverting the use of these penalties “to restore their financial health (…) on the backs of their suppliers”.

The authorities note that “several administrative injunction procedures under financial penalties have been initiated since February” to ensure that the practices comply with the law and have asked the DGCCRF to strengthen their “investigation procedures” on the subject.

Negotiations reopened between distributors and manufacturers
Negotiations between distributors and manufacturers, which take place every year to determine the purchase price of a large part of products sold in supermarkets, were reopened after the beginning of the war in Ukraine to take into account the inflation of production and operating costs, which degrade the financial health of many companies.

They are dragging on, with each side passing the buck, with manufacturers accusing distributors of not taking into account the increase in production costs in their purchase prices, and distributors accusing manufacturers of not sufficiently justifying the price increases requested. The situation is all the more complex as consumers, in a period of inflation, are very attentive to the prices of the foodstuffs they put in their carts and turn to the brands where they think they will find the best deals.

Translated with (free version)


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