France’s food law Egalim as it celebrates its first birthday 

According to a Neilson report, this year in France marks the end of 7 consecutive years of deflation with a price increase of 10% of the in the hypermarkets. So, how can we explain that ? Last year the french government has enacted a new law named Egalim. This law has been voted to put a better balance between the distributors and the growers during the trade relations. It allows a better negociation between them, giving the growers a chance to have a better purchase price. As a result, the distributors put an increase on their sale prices, in order to recover a good margin.

This increase has been noticed by more than 70% of the population. 20% of them considering this as an important problem.

Moreover, this law has been very difficult for the SMEs. 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, SMEs director at Nielsen, the Egalim law could be responsible of it. Indeed, This law supervises the amount of promotional sales. Three quarters of manufacturers ( large groups and SMEs) have seen a promotional sales decrease while the private labels appearing stable. The SMEs can’t count too much on the promotional sales anymore. Plus, Bruno Lesbros declares that several distributors are now attributing priorities to private label. 

This topic will be discussed futher at the Insight Seminar which will take place in Paris on December 12th. 

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