France wants to end “reduflation” and is targeting Nestle, Pepsi and Unilever to help cut prices.

Name the major food manufacturers that don’t help — or don’t help enough — to lower the price of the shopping cart. The French government and the neighboring country’s main retail chain, Carrefour, have named companies they believe should step up efforts to ensure inflation gives consumers a break.

In the case of a supermarket and hypermarket company, the placement of labels on its French shelves is indicated by products that have less content in the package, but are not cheap. A business practice called “shrinkflation” whose days may be numbered.

The French government was the first to reach an agreement with food distribution companies to sell a set of products at the “lowest price”, as its economy minister, Bruno Le Marie, promised in March. Each chain was free to choose the products it wanted – in fact, some companies opted out of the measure – and there had to be transparency, as companies were also obliged to make their margins public.

The agreement between the government and the distribution was in the spring. In principle, it was a temporary measure, which he called an “anti-inflationary quarter”. However, it will be more months. Price pressures in France remain very intense – food inflation was 11.2% year-on-year in August – so the competitive price basket has widened over time. Also, in quantity.

In late August, the administration and retail and consumer groups agreed to freeze or cut prices on 5,000 products. Significantly more than the 1,500 agreed upon in the spring.

And following this agreement, the head of the French government’s economy named the food companies that he thought were doing well and those that weren’t. Among the first is the Italian pasta maker Barilla, as it has passed on the reduction of its raw material, wheat, to the final price.

“There are other industrial groups that I would like to mention that are not playing the game well and could do more,” Bruno Le Maire said in an interview on France 2 television. “I think about Unilever, Nestlé, Pepsico. , which are very large multinational companies that have done a little, but not much. “I think they can do a lot more,” he said.

The reason, he argued, is that they can now pass on to consumers the downward price pressure they are experiencing. And he warned: “We will approve certain measures, through legislation, to ensure that the commitments are met.” The three multinational companies Le Maire mentioned are not French-owned. Unilever is headquartered in London; Nestlé in Switzerland; and PepsiCo, in the United States. And among the measures to be taken is likely to be an end to “redflation”.

“We are going to ban. From November, all products that are subject to quantity changes must indicate this on the labels so as not to deceive the consumer anymore,” French Prime Minister Elisabeth Borne said in an interview with Le Parisien this weekend. .

This promise also comes after Carrefour placed the mark on almost thirty references claiming to have reduced the amount of product in their packaging, but not the price. Including PepsiCo tea, a Nestle chocolate bar and an ice cream cake from Unilever. They’re not the only ones: he also mentions Swiss chocolate maker Lindt & Sprüngli.

The messages, with the slogan shrinkflation, indicate that the product in question has “reduced its content and increased the effective price charged by the supplier.”

“Obviously, the purpose of stigmatizing these products is to be able to ask manufacturers to review their pricing policies,” Stephen Bompais, Carrefour’s director of consumer communications, said in a statement reported by Britain’s BBC. Carrefour Spain did not respond to the question of whether it will pass on this measure. Nor does the Ministry of Consumer Affairs say whether it plans to fight the contraction.

Meanwhile, the Spanish Food and Beverage Industry Federation (FIAB), the employers’ association that brings together manufacturers in Spain, refuses to rate Carrefour’s posters. On the other hand, sources in the distribution sector, who prefer to remain anonymous, do not consider it easy to implement a similar measure in Spain, because the relationship between distribution and producers is different. They also indicate that these are super and hypermarket companies with the French government.

At the same time, some of the large multinational companies mentioned in France have already realized that the peak of inflation has been passed and that consumers are no longer receiving additional increases in their orders. This message was sent to giants such as Nestlé, Unilever, Coca-Cola and Danone when they presented their results for the first half of the year.

For example, Coca-Cola President and CEO James Quincy noted during a meeting with investors that consumers are “increasingly aware” of price evolution, that they are “looking for value” and “buying the products on offer.” His counterpart at PepsiCo, Spain’s Ramon Laguarta, described consumers as “brand loyal” despite the increase, but his company also noted that they would soon return to “relatively more normal” prices.

It is not only in France that an agreement has been reached to try to lower the shopping basket. Also in Italy, although the government led by Georgia Mellon has not yet determined how it will implement it. At the moment, it is known that it will be called the anti-inflationary quarter, and both distribution and manufacturers have been asked to participate. The latter, through various food industry employers’ associations, are the latest to join this anti-inflationary pact, which is due to take effect on October 1.

Source: El Diario





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