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France puts up food and drink prices under new law

France puts up food and drink prices under new law

Nutella, Président Camembert, Ricard Pastis and Carte Noire coffee are among the brands set to cost more in France as a law on food prices takes effect.

The cost of hundreds of popular food and drink products are set to increase from Friday, February 1, as a new law comes into force.

The Loi Alimentation - which will also bring to an end so-called super-promotions, such as buy-

one-get-one-free deals - aims to ensure farmers and other food producers are fairly paid. While prices for many products will remain stable, distributors, such as supermarkets, have cut their margins on products such as meat, fish, milk, fruit and vegetables.

It is intended to ring fence the amount of money that producers will receive even if their goods are discounted at point of sale to consumers.

How much of a price rise?

The 10% margin threshold means a food or drink brand previously sold for €1 (£0.88; $1.1) now has to be priced at €1.1 minimum.

But there will not be uniform price increases, French media report. The law affects supermarkets and hypermarkets more than small local shops.

That is because the big outlets offer some popular brands at or near cost price, slashing their margins on those products, in order to lure customers, in a fierce price war. Their profits depend on big volume and high turnover.

Small shops, however, cannot match the supermarkets' low margins.

Supermarket chain Carrefour is adapting to the law by increasing discounts for loyalty card customers.

Carrefour expects to raise prices by 35 euro cents on average, which is 5%. It says 1,000 food and drink brands are affected, out of 25,000 on sale.

Why is the law controversial?

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. That is because the wholesalers' income should increase as consumers pay higher prices for certain brands.

But millions of French consumers are angry about the cost of living, so there is a risk for the government. It is already struggling to contain often violent "gilets jaunes" (yellow vest) protests.

The protests were sparked by a fuel price hike last year - later cancelled by President Emmanuel Macron - but soon the "gilets jaunes" movement morphed into a wider protest against economic hardship.

For months there have been big weekend protests by the yellow vests across France. Another one is planned for Saturday.


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