French competitors join hands to get lower prices

French competitors join hands to get lower prices

A month after Auchan and Système U had struck a deal to purchase products from the large brands, Intermarché and Casino will also collaborate in this sense. The food industry and other manufacturers fear what is coming next.

Weigh more on price negotiations

French distribution groups Casino and Intermarché will join forces when they meet suppliers for price negotiations. They will then be able to negotiate lower purchase prices in return for larger volumes at companies like Coca-Cola, Nestlé, Unilever and L'Oréal.

 

The collaboration is for both food and non-food, but only A brands, so private labels are excluded - as are traditional fresh products (like vegetables, fruit, meat and fish) and "products from national brands, produced by small or medium-sized enterprises". Some 70 to 80 popular products are included however.

 

Rearrange the playing field

The Casino-Intermarché deal will start immediately and will already impact the price negotiations for 2015, which have started recently between French distributors and suppliers.

 

The collaboration will thoroughly change the French supermarket landscape, which has been in a price war for quite some time. Casino has an 11.5 % market share, while Intermarché has 14.3 % but together, they are larger than Carrefour or Leclerc, respectively number 1 and 2 in the French market (both controlling 20 % of the market).

 

The big two will even have to trail Auchan and Système U, number 5 and 6 in the French supermarket sector. The latter two started a collaboration in September and now represent a 22 % market share.

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