Grass greener, food cheaper
June 22, 2008
By Sandrine Rastello
France Lio, a French nurse trainer, used to peel vegetables over the pamphlets from Kaufland, a supermarket in nearby Germany. Now, as food costs surge, Kaufland's advertisements lure her across the border with the promise of lower prices.
"It is the second time we have come here," said the Strasbourg resident, who made the five-minute drive to Kehl, Germany, with her husband. "We found alcohol-free beer that is two-and-a-half times cheaper than in France and fruit juices that cost 90 cents (R11.22). They are more than a euro at home. We will be back."
While fierce retail competition limits price increases in Germany, France's heavily regulated market - with rules for everything from store size to allowable price cuts - has resulted in higher costs for customers. French inflation has outpaced Germany's every month so far this year, reaching a 12-year high of 3.7 percent last month.
French president Nicolas Sarkozy is trying to loosen the rules, making it easier to build supermarkets and letting retailers and suppliers negotiate prices more freely.
Legislators approved a bill on Tuesday, which must still clear the French senate.
"Prices in supermarkets have increased more in France than in almost all other European countries," Sarkozy said in April. "That is not normal."
Germany is the cheapest country in Europe for international grocery products, according to marketing information company ACNielsen.
In towns near the border, 65 percent of products were 15 percent to 30 percent cheaper in Germany than in France, according to a study released in May last year by Euro-Info-Consommateurs, a Franco-German consumer association. French shoppers account for 50 percent of retailers' sales in Kehl, where the association is based.
In the parking lot of a Lidl outlet, Germany's second-largest discount supermarket chain, nine out of 10 cars were from France. Frederique Mengus, a French secretary, says she shops there even though the retailer has a store in Strasbourg, because "there is more choice, better quality and the prices seem lower".
A proliferation of discounters in Germany is helping to limit price increases. Martine Merigeau, the consumer association's director, said: "Discounters have played a very important role in Germany for the past 10 to 15 years. Competitors have been obliged to adjust."
According to a French government report, maxi-discount stores have a 30 percent market share of the food retail sector in Germany against 13 percent in France..
Owners of small neighbourhood outlets are lobbying legislators, concerned that the discounters will take away business. The government has agreed to amendments granting mayors more power, such as the right to preemptively take over retail space in town centres.
The bill will allow for price negotiations between producers and retailers. Currently, manufacturers have to sell their products to all stores at the same price, and retailers are forbidden from selling goods below cost. They make money on rebates from producers for attractive shelf placements or prominent displays in catalogues.
Luc Chatel, a French government spokesperson, said the government's plan might cut consumer prices by 1.6 percent within three years.
Meanwhile, French consumers continue to head for the border. Marie-Rose Heini, a retiree, said: "We have to restrain ourselves on even essential things. We are told to eat five fruits and vegetables a day, but nobody can afford that."
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