“Brands more expensive in Belgium due to purchasing restrictions”

The perception that prices in Belgian supermarkets are higher than in neighbouring countries has to be nuanced. Private labels and fresh products are actually cheaper, while A-brands are considerably more expensive. Economy Minister Pierre-Yves Dermagne promises to put regional purchasing restrictions on the European agenda.

Greedflation

Belgian Economy Minister Dermagne tasked an institute called Price Observatory to find out once and for all whether food is indeed more expensive in Belgium than in neighbouring countries. High inflation over the past two years had created the impression that food prices were rising disproportionately, while shopping in neighbouring countries – especially France – was often cheaper. Brands as well as supermarkets were accused of “greedflation”.

Some parties therefore called for capping prices for basic products, as France did. Consumer organisation Testaankoop has also been calling for some time for measures to boost purchasing power. However, an initial conclusion of the Price Observatory, in September, suggested that prices in Belgian supermarkets did not rise more than elsewhere. German food prices rose the fastest, in France the slowest, with Belgium and the Netherlands somewhere in between.

Cheap private labels

A new analysis now brings a more detailed and nuanced picture. For fresh products (such as meat, fish, fruit and vegetables), Belgium actually turns out to be the cheapest: fruit and vegetables are 17 % cheaper than in France and 12 % cheaper than in Germany. For fresh meat, consumers pay less than in France and Germany, but more than in the Netherlands.

Private labels – which have become much more popular in recent years – also appear to be cheaper in Belgium. 78.2 % of the private labels surveyed are cheaper than in the Netherlands, 62.2 % are cheaper than in Germany and 59.7 % cost less here than in France. “A shopping trolley with only private labels costs about 15 % less in Belgium than in France, 25 % less than in Germany and 40 % less than in the Netherlands”, Minister Dermagne said.

“Victim of small market”

The study does show that in 2022, products of major brands were on average 13.4 % more expensive in Belgium than in Germany. The difference with the Netherlands was 9.9 %, with France 6.6 %. The price gap with neighbouring countries did stabilise, though. Price increases in Belgian supermarkets averaged 9 % last year, compared with 12.6 % in Germany and 10.7 % in the Netherlands.

So is there greedflation after all? Dermagne points accusingly at brand manufacturers, who allegedly artificially drive up prices through territorial purchasing restrictions that prevent supermarket chains from buying from abroad. “Especially small countries like Belgium, with weak bargaining power, fall victim to the market power that manufacturers abuse to increase their margins”, he said, promising that he would put this on the agenda during the Belgian EU presidency. An investigation into supermarket chains’ margins – that are supposedly higher in Belgium – is still ongoing, with the results expected next year.

Demolishing purchasing walls

Speaking to Belgian newspaper De Standaard, trade federation Comeos reacted with satisfaction: “The study shows that supermarkets are not artificially expensive in Belgium, quite the contrary”, CEO Dominique Michel pointed out. He too refers to territorial purchasing restrictions as a cause of more expensive branded products: “Europe must put an end to this practice. Consumers can buy wherever they want in Europe, but supermarkets cannot. The ambition must be to finally do something about this after thirty years of the single market.”

Retailers have been calling for years for European purchasing walls to be torn down. A European Commission study calculated that these restrictions cost European consumers as much as fourteen billion euros a year, in categories such as cosmetics, detergents, confectionery and beverages.

“Belgian retailers have higher margins”

Brand manufacturers are not amused with the findings: they say that there simply are big differences between European countries. They also point out that evidence of abuse of power is lacking: so far, only AB InBev has been fined, in 2019.

Belgian food federation Fevia identifies “the higher gross operating margin of Belgian retailers” as one of the factors driving up Belgian prices. The government also has a role to play, by creating a level playing field in terms of costs and flexibility, Fevia believes. The federation also questions the role of international purchasing alliances, and calls for this study not to be used under any circumstances to justify a race to the lowest price.