Analysis Group Report Cited in Debate over Proposed Food Pricing Law in France
June 6, 2018
A law proposed by the French National Food Conference (“États Généraux de l'Alimentation” or EGA) calls for increasing the threshold for distributors' resale at a loss (SRP) to a 10% markup of retail price over distributors' purchase price. Under the law, distributors would sell food products for no less than 110% of the price at which they purchase the products from producers. The law's mandate was, in part, to assure better compensation for farmers who have been caught up in French food retailers' years-long pricing wars.
Released ahead of the debate over the law in the French National Assembly, a report cowritten by three Analysis Group consultants argues that the provision will in fact have the opposite effect. The study – whose authors include Managing Principal Marc Van Audenrode, Principal Antoine Chapsal, and Vice President Jimmy Royer – is cited in an article about the proposed law in the French financial newspaper Les Echos. The study argues that the draft law will have the twofold negative outcome of increasing the retail prices of certain foods, thereby reducing consumers' purchasing power, and decreasing distributors' purchase prices for some foods, which in turn will reduce suppliers' (particularly farmers') margins on their products.