The CEO of French hypermarket chain E.Leclerc said on Friday (1 December) that he is ready to cooperate on improving margin transparency among distributors.

“It is the law which has allowed for the lack of transparency on margins,” Michel-Edouard Leclerc said on the Télématin program on France2. “When a manufacturer tells me that ‘I’ve bought this for this price, and so you must buy it at this price’, there’s no way to verify it, it’s not transparent.”

He also offered his support for the demands of consumer associations to suppress the 10% compulsory margin for distributors, enforced by the EGalim 3 law. He described this margin as “crazy” given the 21% rate of inflation on food products over the past two years.

He said E.Leclerc will seek to implement price cuts and a lower rate of inflation while noting that there has already been a shift in attitude among some manufacturers that have lost market share due to their inflated prices.

Nevertheless, Leclerc emphasised that price decreases will largely be seen in non-food categories.

Indeed, last Tuesday, the president of agrifood lobby group Ania, Jean-Philippe André, said that food product retail prices will not decrease in the coming year because manufacturers’ costs have not yet eased.

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By GlobalData

In late November, four French consumer organisations – Foodwatch, Familles Rurales, UFC-Que Choisir and Consommation Logement Cadre de Vie – publicly denounced the “excessive” profit margins of manufacturers and large retailers, reminding Emmanuel Macron of his promise to introduce “an agreement on margin moderation” within the agrifood and retail industries.

“On the one hand, we have growing food insecurity, with nearly one in three people reporting missing a meal for want of money, and a lot of producers living below the poverty threshold,” Foodwatch said in a release published last Wednesday (29 November). “On the other, we have an agrifood industry achieving unprecedented margins (48% in Q2 2023 according to the INSEE) and retail giants increasing their margins on food staples such as pasta and vegetables.”

Macronistes move against La France Insoumise proposal

Last Thursday (30 November) a law calling for limits on food retailers and manufacturers’ profit margins was examined in the French National Assembly. Brought by La France Insoumise, the left-wing populist party, the law was narrowly blocked by Renaissance and Les Républicains party deputies.

La France Insoumise claims that inflation “is largely fuelled by business profits”, citing the International Monetary Fund’s finding that business profits are responsible for 45% of price increases since the beginning of 2022.

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