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The great food price smash-and-grab

03-Mar-2008

While the world's media is bemoaning rising food prices, the French government is sniffing around the food industry for signs of gleeful profiteering. If it is right, the long-term losses of the nouveau cher will be far greater than the handful of centimes gained.

Premier Francois Fillon and his squad suspect the likes of Unilever and Procter & Gamble of hiking prices over the odds - and on products that have never seen hide nor hair of a commodity.

 

 

 

There is no question that taking advantage of consumers like this would be entirely scurrilous. In the current costly climate, everyone in the food chain, from grower to consumer, must expect to bear some of the brunt - but only where it is justified.

 

 

 

The general theme of the 2007 financial results from ingredients companies like Kerry and Greencore has been: "It's been a tough year alright, be we've done what we can and we're kinda proud of our results given the circumstances".

 

 

 

They've tightened their belts to save as much as possible, streamlined operations, and faced the fact that there would be some impact on margins.

 

 

 

When there is no more they can reasonably bare, then they do have to pass some of the burden down the chain.

 

 

 

But whenever there is a crisis situation, there are always people who seize on it as an opportunity for personal gain.

 

 

 

We've all seen the pictures from areas of civil unrest, where looters are running amok, grabbing all the TVs and washing machines they can carry out of shops and homes.

 

 

 

But what does this serve? Only to make matters a whole lot worse.

 

 

 

For now, some retailers have hit back by pointing out that the price comparisons that led to the enquiry were unbalanced: they were based on internet rather than retail prices.

 

 

 

But can anyone explain why internet prices should be more expensive than in-store?

 

 

 

We have to wait for the Fillon squad to deliver their verdict before we can say for sure that anyone has been engaging in the food industry's equivalent of smash-and-grab.

 

 

 

If they have, this will breed mistrust of the industry as a whole, and make it ever harder for multinationals to shrug off the image of greedy powerhouses that put profits above their customers' interests and the environment.

 

 

 

There has been some suggestion that companies have sought to raise prices while they can, before France's notoriously tough competition laws are relaxed and the country starts down the path that could, ultimately, lead to 'two for one' deals on the corner of every supermarket aisle.

 

 

 

Such a scenario would, of course, pit companies against each other to offer the best deal - turning their strategy to one of high-volume-low-value to support margins they have grown accustomed to.

 

 

 

Against this backdrop of uncertainty, the food price story is causing even more concern perhaps than it is elsewhere. Things are changing alright, but let's not panic.

 

 

 

Growers, processors, ingredient makers, manufacturers, distributors, retailers and yes, even consumers need to pull together to minimize the effect of high prices on our food supply right now.

 

 

 

One rotten link and the whole lot could collapse in a heap. And who's at the bottom, pressed by the weight of the forces above and gasping for air?

 

 

 

The poor old consumer that the system is trying to feed in the first place.

 

 

 

Jess Halliday is editor of award-winning website FoodNavigator.com. Over the past decade she has worked in print, broadcast and online media in both Europe and the United States. If you would like to comment on this article, please email jess.halliday'at'decisionnews.com

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