Avian flu, drought and now the energy crisis… The agri-food sector is facing an unprecedented “multifactorial” crisis, warns the CEO of Système U, Dominique Schelcher, which points to a risk of shortage of certain products, especially in the fresh produce section. Also manager of the Fessenheim store in the Haut-Rhin, he returns to 20 minutes on the fuel crisis, and discusses consumer trends for the end-of-year celebrations.
What is the situation regarding the availability of fuel at your service stations?
Things are improving, but we are not yet in an optimal situation, because the logistics of transporting fuel are extremely oily, so when they get stuck, they take time to get back in place. It’s all the longer that there are always precautionary purchases on the part of consumers: we sell more fuel than necessary, because people are still worried about not finding any.
What is your assessment of this crisis?
It was the strategic stocks that saved us, and the most important lesson I draw is that in the event of a crisis of such gravity, it is absolutely essential that the government move as quickly as possible towards the release of these strategic stocks to create fluidity. We may have been a little late at the start of the crisis. There were not enough reports from the field to measure the extent of the situation.
Are you noticing shortages of certain products in your stores?
Post-Covid, the usual availability of products has not been found. The food chain is a little out of order, these are not outright shortages, but for many these are occasional shortages of products, which are missing at one point and which come back. This for lots of reasons. For example, there is a shortage of 40,000 truck drivers in France, so sometimes manufacturers are unable to deliver. Other times, production lines stop for lack of manpower. There are shortages of raw materials, or packaging: there is thus a shortage of glass in France. And the hard point is the rise in energy prices, which particularly affects agrifood companies.
Electricity and gas will cost them more, even much more when they are poorly covered, and at some point they will have no choice but to pass this on in their prices, or to choose production. Some suppliers are already saying that instead of producing sixty products, they will only produce forty-five. It is a risk of lack, tomorrow, additional.
On which products does this threat weigh the most?
In fresh produce, this is likely to be noticeable. We are starting to see it, because behind there are companies that have a lot of fridges and a process that requires a lot of gas and electricity. I am thinking of the difficulties encountered by certain poultry producers as well. But all food products can be affected. The agri-food chain is at a turning point, it is at the time of change.
In your opinion, is the support of these increases in energy costs by the State insufficient?
Business owners don’t like asking for help. They want to be able to work and live from their profession. Except that there, the scale of the increases is such that support is needed. And as it stands, it is not enough for some companies, especially for SMEs in the food industry, which are stunned by the magnitude of the increases next year, and which will not succeed with the current devices. .
Are you concerned too?
Yes we are worried. With us, the bill will double, whereas we had made our arrangements by buying electricity in a group for 2023. But we will find solutions to digest it, anyway, we have no choice.
How can this increase not be passed on to the consumer?
I don’t have the answer today, but we are working on it. We have to deal with a combination of exceptional factors. With the war in Ukraine, global warming, the price of electricity… The crisis is multifactorial, it’s the perfect storm for the agri-food chain. At the same time, the business world manages to adapt, and I am convinced that once again, we will do everything to resist, particularly the merchants, who are at the heart of people’s lives.
Which products suffer the most from inflation?
Products with a high agricultural material base, such as dairy products, because milk is more expensive. Chopped steak too, because quality meat is rarer. Some fruits and vegetables, due to the drought, are less available.
We talk a lot about rice for 2023, do you share this concern?
There is an alert on rice, for the moment it has not been proven, but we are monitoring it very closely.
Do you fear higher inflation in 2023 than in 2022, how do you anticipate next year?
I am facing the year 2023, in an uncertainty like I have never been. Answering this question is extremely difficult. Inflation will continue, at what level, to what extent, that, I don’t know.
Are all the price increases justified?
It is our job as merchants and negotiators to discuss the increases that are requested by our suppliers. Thanks to comparison criteria, we can assess whether an increase requested of us is justified or not. If it is justified, we pass it on to our prices, in whole or in part, because it sometimes happens that we take on our margins to cushion the shock. Our current fear is that we will arrive at price levels that scare customers too much, because inflation will continue. Behavioral changes are already being observed among our customers, who are now giving priority to promotional products.
In general, what are the behavioral changes in French consumption?
They buy less in the traditional department, less fruit and vegetables, less meat, less fish, less cheese in the cut, because it’s more expensive. But when they buy it, it’s quality. They are also increasingly abandoning the big brand for the private label, it is a phenomenon that is accelerating.
Finally, some customers simply begin to buy less, that is to say, instead of having forty products in their basket, there are only thirty-five left. They buy detergent, but not fabric softener, things like that… This fall in volume is an alert at this stage, and we are monitoring it closely, to see how it evolves.
How are the end of year celebrations going, will there be changes in consumption habits?
On anything non-food, there is no availability alert. During the Covid, there may have been alerts on toy containers blocked in ports. This is not the case this year. There will be toys, decorations and gifts. In food, on the other hand, there will be products in tension. With the bird flu, there may be a little less foie gras, and more expensive.
But, our conviction at Système U is that people will want to get together with their families during the Christmas holidays, which remains an important moment in the life of the French people, which is why we are working on offers adapted to the power of purchase of the French. On the other hand, perhaps they will buy in a little less quantity. Consumption will change a little, but people will treat themselves to the holiday table.
And what about the Christmas lights in your stores?
I want to say that this is unfortunately not a year for bright decorations, and I believe that many bosses will give up on it, or do the bare minimum. When you’re told you might run out of power for two hours, I’d rather not put up Christmas decorations. I won’t install any in my store in Fessenheim, even though I’ve been putting them on for years.
On energy savings more generally, what are you doing to limit your consumption?
Large-scale distribution is the first profession to have come forward on this theme, starting in July. This results in the extinction of the signs as soon as the stores close in the evening, less lighting in the morning when the customers are not yet there, and a temperature capped at 19°C. I encourage U store owners to invest in photovoltaic panels and in new cold production. We must continue to modernize in technologies that consume less energy, and when stores do so, their energy bills drop significantly. This is my case in my store in Fessenheim.
Finally, is this crisis an accelerator for the energy transition?
Yes, this is the positive note of this crisis. Many people needed a shock to push them to lower their bills, and protect the planet. Here we are.