France ups resale threshold to favour food distributors & farmers
According to the legislation, enforced 1 February 2019, retailers must sell food products for a price 10% higher (at least) than the purchase price.
The law amends a 1996 ruling prohibiting the sale of any product below its purchase price. This meant that when a food item was purchased from a producer for €1, the same item had to be sold for at least €1 in-store.
This latest ruling means that the same product cannot be sold for less than €1.10.
The decision comes after a government review of the food industry, Etats Généraux de l’Alimentation (EGA), concluded the previous threshold did not ensure all of a distributor’s costs, including transport, logistics and staff, were covered.
Indeed, when detailing his priorities for the French agri-food sector last year, president Emmanual Macron argued that ‘strategic orientations’ and ‘major reorganisatons’ were required to safeguard the industry.
During his speech in Saint-Genès-Champanelle in January 2018, Macron threatened to name and shame brands that “do not change their practices” to ensure “the right price [is] paid to farmers”.
In the days following Macron’s speech, the aforementioned legislation that addressed a perceived imbalance of power in the supply chain was proposed by France’s Ministry for Food and Agriculture.
While consumers may be concerned that spending will increase, the ministry said just 7% of food products will be impacted by the ruling.
Promotions
In addition to the above supply chain ruling, new legislation designed to cap retail promotions have also come into effect.
According to the Ministry of Agriculture and Food, the number of promotions in France has grown rapidly in the last few years, from 14% in 2000 to 20% in 2016. Such promotions can reduce product value and affect the perceived value of agricultural produce in the eyes of the consumer.
The latest legislation therefore caps price reductions at 34% of the item’s total value, with promotions approved for no more than 25% of the retailer’s total stock.
In addition, the Ministry said promotions such as buy-one-get-one-free (BOGOF) can contribute to food waste, since it can encourage consumers to buy products they don’t need. The ruling therefore abolishes BOGOF promotions in-store, in favour of buy-one-get-two-free deals.
The rulings – both regarding the resale price of food products, and promotions – will be trialled for a period of two years.
BOGOF focus
Retail promotions, and in particular BOGOF, have similarly attracted attention in the UK. Last year, Health and Social Care Secretary Jeremy Hunt detailed new measures in a bid to halve the number of obese children in the country by 2030.
This included banning displays of unhealthy foods at checkouts, and the inclusion of foods that are high in sugar, salt or fat in promotions, such as BOGOF deals.
The UK’s Food and Drink Federation (FDF) however, which represents the interest of the food and drink sector, spoke out against the measures at the time.
“Advertising and promotions underpin the healthy, vibrant and innovative market for food and drink that UK shoppers love.
“If government restricts our ability to advertise and promote new healthier options to shoppers, it could risk the success of the reformulation programme. Any further restrictions will have to pass stern tests around targeting and effectiveness.”
