**Belgium**: Colruyt shares updates on negotiations with suppliers, noting constructive discussions but challenges with certain companies. As pricing scrutiny escalates in the supermarket sector, the article explores the impact of rising costs and significant profits within the food industry amidst ongoing economic pressures.
Colruyt, a prominent figure in the Belgian supermarket sector, has recently provided insights into ongoing negotiations with suppliers, highlighting both progress and challenges in discussions related to pricing. In an interview with Retail Detail, Colruyt mentioned, “The negotiations with the majority of our suppliers are very constructive, and we have reached an agreement that satisfies both parties.” However, he acknowledged that discussions with certain suppliers, including Procter & Gamble, known for its Pampers product line, have proven to be more difficult.
Colruyt expressed a commitment to continue engaging constructively with its team of experienced buyers, stating confidence that agreements will be reached as they do annually. “Things are currently evolving in the right direction,” he added, although he refrained from divulging additional details regarding the specifics of the negotiations or their progress.
The backdrop to these negotiations is the increasing scrutiny surrounding pricing within the supermarket industry. Supermarkets have raised concerns that several suppliers appear to be capitalising on rising costs to disproportionately inflate prices. This sentiment is reflected in broader economic observations; notably, it has been reported that during the inflationary period of 2021-2022, supermarkets, on average, did not experience profit from rising prices, but rather passed the increases in production costs to consumers.
Economist Olivier Malay, in a piece published for think tank Minerva, illustrated that despite the challenging economic conditions, profits within the food industry and raw materials trading surged significantly. In 2022, trading profits reached $13 billion, effectively doubling from the previous year. Among Belgian agri-food professionals, profits reportedly surged by an average of 33.2%, with the largest companies experiencing an even more dramatic increase of 78%. Malay pointed out that these profits were largely driven by price hikes that exceeded the added costs associated with production, with sales volumes remaining relatively stable during that timeframe.
The current negotiations between Colruyt and its suppliers, particularly in light of these financial dynamics, underscore the complexities retailers face in managing costs while ensuring fair pricing for consumers amidst a tumultuous economic landscape.
Source: Noah Wire Services
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