At least 10% of recent promotional activities conducted in France would be illegal under a new proposed law introduced after the 'Nutella riot' in late January, according to a new survey by Nielsen and Dauvers Publishing, released by French retail industry expert Olivier Dauvers.
To avoid such an event happening again, the French government included a provision in a recent bill about food and drink that is set to come into effect in March 2019. This would introduce a a resale value of at least 10% above the original price paid to the producer.
It would also introduce a sales limit, where a product could not be discounted by more than 34% of its original price. Finally, the overall turnover for retailers made from promotional activities would have to be under 25%, if the proposed legislation becomes law.
Impact On Drinks And Alcohol
The latest survey examined promotional flyers and sales activity in 11 unnamed supermarkets and hypermarkets in the French retail sector during Q2 2018. In 2017, 13% of sales conducted would be illegal under the new law, falling to 12% in Q1 2018. Though Q2 2018 saw this number reduced to 10%, as it covers all products, there are important disparities between product categories as well as between surveyed stores.
According to the survey, alcohol and drinks categories would be the most impacted by the new law. It found that in the case of champagne, for instance, 45% of the turnover of the product category is realised via sales promotions, far from the 25% indicated in the law text. Whiskey and bourbon are also likely to be heavily impacted, as the survey found that 35.6% of the turnover in that category was also achieved via promotions.
Promotional activities contribute to 33.8% of turnover in the beer category, 30.8% in wine, and 28% in sparkling wines (excluding champagne).
Significant Disparities Across French Retailers
The average turnover gained via sales at the 11 retailers was 21.7%, which hides significant disparities.
According to the survey, two unnamed retail chains realised 28% and 26% of their turnover via sales, taking in all product categories - meaning they would be affected by the proposed legislation.
A majority of the retailers hovered under or just over 20%, while one retailer posted 11% turnover gained by sales operations.
A Changing Landscape
At the moment, the text still has to be discussed and agreed upon by a joint committee before being finalised in September, due to the differing texts approved by the National Assembly and the Senate.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Matthieu Chassain. Click subscribe to sign up to ESM: European Supermarket Magazine.
