France Targets Grocers—and Therefore Consumers—With Awful New Food Law
At a time of civil unrest, France's government wants to push retail food prices even higher.
France, it seems, has long been plagued by two towering evils. First, French farmers feel they're underpaid for the foods they produce and sell. These farmers find different ways to protest every year. In 2016, for example, French farmers protested lower milk and pork prices by dumping manure in roadways and blocking traffic. French farmers launched similar protests last year and in 2015. Oh, also in 2014. If I liked puns, I'd say that such protests are almost a riot of passage.
Second, French consumers appear to believe that a sale on Nutella, the sugary-chocolaty-nutty spread, is reason enough to act like they're auditioning for a Black Friday sale fight in the United States or something slightly less traumatic—say, the grocery scene in Bird Box.
This is not hyperbole. Nutella discounts "caused turmoil in France last [year] as hundreds of French citizens fought to buy stockpiles of the chocolate and hazelnut spread." The seventy-percent Nutella discount is widely blamed for consumer violence (video) in French grocery stores. (Anyone who's ever visited France—also, anyone who hasn't—knows that "[s]ome Paris grocery stores are much larger or smaller than others.")
As befitting Nutella, those riots spread. This led French lawmakers to consider a law banning such discounts.
Enter that new French food law, cleverly dubbed Loi Alimentation ("food law"). The law, which debuted this week, is intended to help French farmers by increasing their margins without somehow also hurting the grocers who sell the foods they grow. French agriculture minister Didier Guillaume says the new law is intended to "find a way [for grocers] to spread their margins differently." (Again: "spread.")
This month, according to the European grocery site Retail Detail, the already "infamous" law is making some grocery food more expensive for consumers in the country. Calculations reported by Retail Detail suggest the price of many popular foods has risen on average by more than six percent, including more than eight percent for Nutella. That's because the law bans many food promotions—including, for example, steep discounts on Nutella—and effectively raises the minimum prices stores may charge for many popular foods.
On the farming side, the law lets the government squeeze distributors, forcing them to cut margins on agricultural products such as meat and vegetables, theoretically without impacting the price grocers fetch from consumers. "The government hopes that by making shops pay more to their suppliers—the wholesalers—the latter will pay more to French food and drink producers," the BBC reported last week. "That is because the wholesalers' income should increase as consumers pay higher prices for certain brands."
But the law is almost certain to backfire and produce a rash of unintended consequences.
"How consumers paying more for Coke will result in higher milk prices for France's farmers is unclear," The Economist wonders.
"There are doubts about whether the new law will actually work as hoped," the BBC cautions.
Mathieu Escot of the French consumer rights group UFC Que Choisir said the law discriminates against lower-income consumers, who will pay more at a time when France is racked by protests over the rising cost of living.
"So it's French people on more modest incomes, with weak purchasing power, who will pay," Escot told the BBC. And pay they will. Estimates suggest the new law will cost French consumers nearly more than $1.5 billion.
The law's intended bite also may prove rather toothless. Euronews reports "there is no legal mechanism to make [grocers] reduce their profit margins on agricultural goods."
Some French grocers aren't taking the new law lying down. Michel-Edouard Leclerc, the head of French hypermarket chain E.Leclerc, says the company will obey the law "but we're going to be smart about it: we are going to increase the amount of coupons, do things that are legal and lower the prices of 4,600 products under our private label." Carrefour, another French hypermarket chain, is also working around the law.
But French farmers and a French grocer's association—Leclerc is not a member, though Carrefour is—are hailing the new law, mostly because they believe it will save them from themselves.
I have some sympathy for French grocers—at least those who don't support the new food law. After all, this is at least the second lousy law French grocers have been forced to combat in the past several months. Last summer, I discussed how French grocery stores were fighting back against dumb EU rules that banned the sale of millions of varieties of agricultural seeds.
France's new food law is intended to solve two problems. If common sense and early returns are any indication, the law won't solve either problem. But boy will it create a whole host of new ones.