Shoppers in France favour budget supermarket items as inflation rises

Budget own-brand supermarket products have been rising in popularity in France since the beginning of this year, while organic and ‘national brand’ products have become less present in shoppers’ baskets.

Sales of products with a brand name, for example Lindt or Danone, fell by 0.5% in the first quarter of the year, figures from data company NielsenIQ, experts on retail and consumer intelligence, show.

Meanwhile, sales of budget own-brand products rose by 0.1%.

And within the category of own-brand products, sales of the cheapest labels rose by 11%.

Philippe Goetzmann, a retail expert, told BFMTV that it is linked to inflation, which is expected to reach around 5% on supermarket products this summer.

“When there is a crisis, and it results in high inflation, consumers change the way they shop,” he said.

“The same phenomenon was observed during the last financial crisis - own-brand products took market share from national brands.”

Read more:French supermarket price wars continue as shoppers try to save money

Inflation rates have risen all around Europe due in part to Russia’s invasion of Ukraine, as well as global supply chain issues linked to the Covid pandemic.

Mr Goetzmann said that in the past 10 years, households’ food budgets have been stable, while shops have been competing for lower prices and there has generally been deflation. This has allowed people to invest more in upmarket products.

“Today, the opposite is true,” he said.

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A February study from Observatoire E.Leclerc shows that 94% of people in France buy own-brand supermarket products, and one third buy them every time they shop.

Consumer expert Pascale Hébel said the popularity of own-brand and cheaper products will continue for a while.

“The increase in pasta consumption observed after the 2007-2008 crisis lasted until 2016. You don't change your diet overnight," she said.

She added that she believes that in the long run, consumers will think more about the “type of product” they are buying, rather than the brand.

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Organic food sales level out after years of growth

The head of leading French organic supermarket chain Biocoop said that 2021 was the “first time Biocoop has seen a drop in revenue”.

Sylvain Ferry said the company posted a turnover of €1.6billion last year, which is 1% down on 2020.

Despite the slight drop, the company opened 81 new shops.

Competitor Naturalia posted turnover of €385million in 2021, a drop from the €395million in 2020. The brand has 259 shops around the country, 38 of which were opened last year.

The drop in popularity has been linked to inflation and a drop in households’ spending power. Organic products are on average 50% more expensive than non-organic ones.

Otherwise, the Covid pandemic resulted in more people favouring local products, to the detriment of organic ones that are not necessarily produced locally.

Read more:First 100% organic E.Leclerc supermarket in France closes

Mr Ferry said the company planned to combat stagnating sales by prioritising local suppliers.

He also said that they will slow down the pace of opening new shops, with around 50 new ones planned in 2022, compared to the average of 70 in previous years.

“We are also going to streamline the range of products that we stock,” he said.

“We have an average of 5,000 items per shop, which is too many.”

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