France forces food companies to cut prices

French shoppers can expect lower prices for their food from July 2023 after Finance Minister Bruno Le Maire received a commitment from 75 food companies, including Unilever (ULVR.L), to cut prices on hundreds of products.

The French government is outraged by the record high supermarket prices in recent months, despite the decreased cost of raw materials for food producers. Minister Le Maire said the companies, which together account for 80 percent of food consumption in France, could face financial penalties if they do not comply with the price cuts.

Main products of which the prices will drop

Le Maire announced that pasta, poultry and vegetable oil are among the products of which prices will be reduced. Beef, pork and milk, however, would not be affected by the measure.

European concerns over high food prices

High food prices are a concern for European governments, but France takes one of the most aggressive positions when it comes to pushing for price cuts. In Hungary, for example, Prime Minister Viktor Orban has imposed mandatory price cuts on a number of basic foods.

Consumers are choosing private brand alternatives more often

Supermarket chains across Europe are noticing that consumers are increasingly choosing cheaper private label alternatives over branded products. France's Carrefour even has an "anti-inflation button" on its website that shows customers cheaper alternatives and often redirects them to own-brand products.

Comments from concerned parties

Unilever confirmed that it is one of the companies to cut prices next month. Other food companies such as Nestle, Danone, Kraft Heinz and Pepsico did not comment directly on the measure.

Food industry inflation and profits

French inflation fell to its lowest level in a year in May, but food prices still rose 14%. However, the food industry saw its profits rise, largely making up for losses during the pandemic.

Reuters.com