Trade negotiations: organic products under pressure

Organic products are at the heart of the brands ‘strategy in supermarket distribution. In 2018, the organic turnover in Hyper and Supermarkets was of €4.5bn euros. Leclerc plans to double its turnover in this segment by 2022 and Carrefour plans to multiply it by 4.

However, according to Synabio (the observatory for trade negotiations), there is more and more pressure put on suppliers. 28% of organic companies are asked about a price reduction before opening discussions. After the first round of negotiations, this indicator goes up to 40%. This is a difficult situation as prices for raw materials increase. Adding to that, penalties apply in case of delay or supply shortage, which is judged excessive by half of the respondents as their products are more weather dependent. By applying heavy penalties to organic suppliers, distributors impact negatively on the development of organic offer. “We ask the supermarket distribution sector to take into account the increase in price of organic raw materials” says Jean-Marc Leveque, president of Synabio, gathering 200 organic companies representing a combined turnover of 3.4bn euros.

LSA, Camille Harel, 21st January 2019.
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