Isobel O’Neill, Bord Bia Paris, Bord Bia - The Irish Food Board
Inflation on the rise
According to a Neilson report, this year in France marks the end of 7 consecutive years of deflation. This is represented by all types of brands, with large brands bearing the highest impact showing a price increase of more than 10% in hypermarkets. Among categories, alcohol which is subject to high taxes and rising world demand is showing an average price increase of +4%. These changes have not gone unnoticed among French consumers as 7 out of 10 have reported noticing an increase in food prices in 2019, while 2 out of 10 have stated that this is a main concern.
Private labels profit
Another result which came after the introduction of this law concerns the amount of sales made though promotions. From 13.1% in 2000, this figure had risen to 21.7% in 2017 before starting to fall in 2018 in anticipation of the law, and reaching 19.3% this year. Three quarters of manufacturers have also seen the amount of promotional sales decrease, compared to only 44% in 2017. This decline concerns both large groups and smaller companies, with only private labels appearing stable.
Criticisms have also been made regarding the law and the negative impacts that it is creating for SMEs. After years of sustained growth, SMEs are currently experiencing a slowdown of sales in supermarkets. While SMEs are still experiencing a high level of growth, this growth rate is almost half as high as it was last year. According to Bruno Lesbros, SME Director at Nielsen, SMEs and VSEs represent only 32.7% of growth while private labels are increasing. He believes this can be attributed to the introduction of the Egalim law, and the priority that several distributors are now attributing to private label.
This topic will be discussed further at our Insights Seminar which will take place in Paris on December 12th. For more information on the this topic or if you would like to know more about our Insights Seminar, please contact the Bord Bia Paris office.
Bray, F. (2019, October 2). Egalim freine les PME dans leur croissance. Retrieved from LSA Commerse & Consommation : https://www.lsa-conso.fr/egalim-freine-les-pme-dans-leur-croissance,329201
Ministère de l'agriculture et de l'alimentation . (2019, February 11). #EGalim : ce que contient la loi Agriculture et Alimentation. Retrieved from Ministère de l'agriculture et de l'alimentation : https://agriculture.gouv.fr/egalim-ce-que-contient-la-loi-agriculture-et-alimentation
Puget, Y. (2019, 10 1). Loi Egalim: les résultats 8 mois après [les chiffres]. Retrieved from LSA Commerce & Consommation : https://www.lsa-conso.fr/loi-egalim-les-resultats-8-mois-apres-les-chiffres,329696