Retail

EuroCommerce Calls For Action To Address 'Fragmentation of the Single Market' By CPG Firms

By Steve Wynne-Jones
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EuroCommerce has launched a campaign urging decision-makers to address what it said is the 'fragmentation of the Single Market' by large consumer goods manufacturers, who it claims are restricting the freedom of retailers to source goods from across the continent.

This, in turn, leads to prices being 'artificially raised' for consumers, the group, which represents the retail and wholesale sectors in Europe, added.

Speaking at the Czech Presidency conference on the 30th anniversary of the Single Market, EuroCommerce director general Christel Delberghe said that it was "high time" that the EU took decisive action to ensure that retailers could offer the best price possible to shoppers in these constrained times.

Read More: EuroCommerce Director General Christel Delberghe On The State Of Retail

'A Functioning Single Market'

"Large consumer goods manufacturers fragment the Single Market for their retail and wholesale customers. This is costing European consumers €14 billion," she said. "Next year the Single Market will be 30 years old and we want a functioning Single Market for everyone.”

According to EuroCommerce, large consumer goods manufacturers benefit from the Single Market by concentrating production in a few sites to deliver their products across Europe and sourcing ingredients where they see fit.

However, they require retailers and wholesalers to only buy from their national distributor (mostly a subsidiary of the brand) at a price which they set for each market.

Retailers who seek to operate more efficiently by sourcing centrally or in another market may find their supplies curtailed or stopped completely.

Market Restrictions

A recent European Commission report estimated that these market restrictions are costing European consumer at least €14 billion.

'With high inflation and consumer purchasing power being hit hard by rising prices for everyday products and energy, EuroCommerce wants the Single Market to work for everyone,' the group said in a statement.

'The retail and wholesale sector operates on low margins (typically 1-3% net for food retail) in a highly competitive environment; this means that any savings derived from a proper single market for sourcing would be passed on to consumers. On the other hand, large consumer goods manufacturers enjoy high margins (typically 15-30% net) and maintain those margins by setting prices for each market across Europe separately.'

© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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