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French Grocers Could Benefit From Food Price Cuts, Analysts Say

By Donna Ahern
French Grocers Could Benefit From Food Price Cuts, Analysts Say

French grocers may benefit from the country's demand that big food producers impose price cuts as sales of supermarket own brand products rise and the major manufacturers are driven to become more competitive.

The price cuts are unlikely to have had a material impact during the second quarter for retailers such as Carrefour, Casino, or Auchan, analysts say. But they could make a difference over the remainder of the year.

Carrefour reports second quarter earnings on Wednesday followed by Casino on Thursday.

Retailers Guidance 

Investors and analysts will look for guidance from retailers on the likely impact of price cuts on shoppers' behaviour and on revenues when supermarkets have invested more in their own brand food products.


"The impact for French consumers' budgets will be marginal, because the price drops are a few cents, on a small number of branded products," said Emily Mayer, business insights director at Circana, which provides data on consumer behaviour.

"But if the lower prices mean that shoppers buy more of those items, it could compensate, and could even result in a positive effect for retailers," she added.

Carrefour has widened its own brand food range as demand for cheaper alternatives to the big brands has soared. The retailer aims for its private label range to account for 40% of food revenues in 2026, up from 33% in 2022.

Increased Investment 

Grocers across Europe have since 2020 increased investment in improving the quality of their own brand foods, attracting shoppers seeking the same taste at lower prices.


In France, sales volumes of the cheapest private label ranges offered by supermarkets rose by 12.8% in the first half of 2023 compared to the same period last year, Circana data showed, while sales volumes for big brand consumer goods, whose retail prices are often dictated by the manufacturer, fell by 7.2%.

Of the 75 biggest food companies ordered by the government to cut prices, around 40 agreed to do so, a junior minister said in a July 13 local radio interview, and they will lower prices on some of their products by between 5% and 7.8% this month.

"The government has typically been pro-manufacturers and against retailers, and for the first time in many years they acted differently," said Clement Genelot, nextgen consumer analyst at Bryan Garnier in Paris.

Nestlé and Danone are among food producers whose product prices have risen more than 10% this year, data showed on Tuesday.

Despite French shoppers opting for cheaper groceries, Carrefour has managed to keep its market share relatively stable while Casino and Auchan lost share to discounters E. Leclerc, Lidl, and Les Mousquetaires.


Read More: How France Secured A Fall In Food Prices

News by Reuters, edited by Donna Ahern, Checkout. For more technology stories, click here. Click subscribe to sign up for the Checkout print edition.

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