Following the conclusion of trade negotiations between supermarkets and the food industry, 20 Minutes questioned Michel-Edouard Leclerc, president of the strategic committee of the E.Leclerc centres. These annual negotiations make it possible to fix the prices and the conditions under which the supermarkets obtain supplies from manufacturers, and will have repercussions on the receipt of the consumer receipt.
What is the outcome of the commercial negotiations that have been completed with the suppliers?
We are coming out of these negotiations with a price increase forecast in the supermarket universe of around 10%. Manufacturers are not completely satisfied, and in fact distribution has negotiated a lot, but this 10% is added to the 15% of 2022, and in eighteen months households are strongly impacted.
What consequences will this have for you?
Our idea is to dilute the effect of these increases as much as possible so as not to penalize our 19 million customers, and we will pass on the increases to the consumer until July. We are also going to adapt our offer, sector by sector.
Could it have been worse?
Requests [des fournisseurs] that have been made to Leclerc since December were exorbitant. In many cases it was poker, in the majority it was about excessive requests especially by panic, by excessive anticipation, with this idea that if you don’t ask now, the dishes will not come back. In a country where the administration has marked out the exercise of negotiation, without really taking into account the vagaries of the market, the temptation is great to want to solve the problems of increased charges in one go. Last year, however, the government itself reopened a round of negotiations in view of the war in Ukraine and the energy crisis.
The suppliers ensure that they pass on the increase in the price of energy and raw materials, do you nevertheless find that this lacks transparency?
It’s a difficult exercise, both for manufacturers and distributors, to anticipate the coming year, when we all have bills that have increased. But most manufacturers haven’t been transparent, and we’re frustrated with that. Me, I remain on my hunger on the absence of explanations. We were hit last year, we were presented with very high bill increases, food was increased by 15%, and finally, we see that the large international companies are posting increases in dividends. Today, everyone notices that manufacturers and distributors have overpaid the price of containers, to cite just this example. Behind the income of the small farmer that is invoked, there are bigger ones who are hiding, and by passing on these demands for increases to the consumer, the system has made the French pay for something other than raw materials or the effects of energy crisis. The war in Ukraine has had a good back, so consumers have reason to be perplexed about these bullish waves. At the same time, I find that the public authorities have not been on our side.
What do you think of the “anti-inflation basket” project that the government could put in place?
I’m not against the idea of on an anti-inflation basket, but we have no interest in on thirty or forty items, when we are generally cheaper on many more products than that . This is why in this context where everything is increasing, we are going to invite our consumers to compare. From Monday, we will relaunch our price comparison platform. We tell the Leclerc consumer to take a look at other brands, to make sure that we are cheaper. It is one initiative among others. This weekend we are organizing a fuel operation at cost price. It’s just our margin that we give back to consumers, and it’s very low, around a few cents, but it’s also an act of commitment. We confirm that we are still in the price range.
What impact is this inflation crisis having on consumption?
Products that are a little “premium” in quality, in labeling, and therefore a little more expensive, find themselves penalized. Organic, in particular, as well as racy meats. There is also a shift from major brands to distributor brands, and even within these, entry-level brands are up 10% in volume.
How do you think the situation will evolve in the coming months, the next few years?
I believe we have entered a period of long inflation. We are currently experiencing transitional inflation, which is both a mixture of speculation, the effect of war, post-Covid disorganization… This will not last, with a peak that will be reached in July . But afterwards, we will remain in a phase of permanent inflation for ten years, which will be more due to the change in production methods.
We are going to move towards more environmentally friendly food, towards the end of fossil fuels, and towards the relocation of part of our production to strategic sectors. These three movements will make the products more expensive, because it costs more to produce here than in China, and more expensive to produce clean and sustainable. It will obviously be necessary to accompany this inflation with measures in favor of purchasing power, through wages, redistribution, lower taxation, but there will be an issue of acceptability. We, Leclerc, have to fight so that this new economy, which will cost more, is still sold as cheaply as possible. From this crisis, we must learn lessons, and when we remove the prospectuses which represented 60,000 tonnes of paper, we are already beginning to switch to the low-carbon era.