Because Centromarca is wrong about inflation

Someone should re-read Ludovico Ariosto's Orlando Furioso. The work tells of the deeds of Christian and Muslim knights used to face each other. Among these was Agramante, the king of the Moors who had managed to bring together very different armies but sharing the same faith, despite being of different ethnic groups used to tearing each other apart through continuous internal strife. Large-scale distribution has always been like this: contentious and unable to give itself a common strategy. Finally, its three most important expressions (Federdistribuzione, Conad and Coop) have found a meeting point in political interlocution with the Government after a more or less long period in which each brand has tried to make do with the requests to increase the price lists from upstream they fell like a river in flood onto the shelves of large-scale distribution, inducing in consumers the conviction that the responsibilities were exclusively downstream.

The food industry has always been inclined towards more sober and measured attitudes. It has the philosophy of a well-organized lobby on its side. He knows he has Coldiretti breathing down his neck and the reasons for the upstream supply chain but he did not expect that the GDO, for the first time, would hold the position together with the Government. The requests for increases in the price lists (not always justified) all in all accepted in the individual brands, the excessive duration of the contracts in times of uncontested inflation and the lack of overall political vision of the latter convinced it to hold out even this one time in the certainty that the front would sooner or later crumble. On the other hand, the increases requested, largely objective, followed the increases in raw materials, energy and transport, making them almost inevitable. Others less. Especially the differences in impact between the different sub-sectors.

Centromarca, the most titled association, however, has aimed too high. He first refused a dialogue with the large-scale distribution aimed at building a common path and then thought of replicating the same attitude with the Government by getting up from the table and reiterating his intention not to sign anything. The GDO did not break down and remained seated at the table. Who gets up is always wrong.

Predictably, the closer September approaches, which signals the expiry date for adhering or not to the anti-inflation pact, the more there are those who try to sow confusion in the Agramante camp. However, if today the ferocious controversies over the "expensive trolley" do not affect the large-scale distribution (at least from the political side) it is due to Federdistribuzione, Coop and Conad who have well understood the need for a constructive dialogue with the Executive. Regardless of its color. This is called "doing politics" something unknown (except in Coop and, in part, in Conad) in the associative world of large-scale distribution until some time ago. A result that goes far beyond what the price operation will be able to guarantee concretely.

The GDO is therefore in the field while Centromarca will have to find a way to return. Dialogue with the Government on inflation and possible interventions is therefore not the exclusive matter of Confindustria and Confcommercio which obviously have no interest in snubbing the Executive and, today, are well hidden from the matter. At stake is support for the economy, intervention on the tax wedge, their respective roles on the PNRR and much more.

The government in office, especially the Prime Minister, has its own intrinsic strength because it has no alternative at least until international alliances on the conflict on Europe's borders dictate the political and economic agenda. Among other things, the accused is not the GDO but the multinationals. Natural objective (always) for the local sovereign right which almost always proposes a ridiculous caricature. A very serious mistake to blame them on the part of government officials. An equally serious mistake on their part to interpret the role of those who push to refuse confrontation. In France the controversies are more or less the same: “Distributors did a good job right from the start with the anti-inflation quarter. The producers were a little harder to convince, but they followed through,” commented Bruno Le Maire on RMC and BFMTV. Except… except "four or five large groups", multinationals covering various sectors, food, hygiene and cleaning products, which "don't play the game" and whose names could be revealed "next week" to "twist them the arm". I can imagine the reactions from us if a politician were to allow himself such statements…

Last May, Le Maire had already threatened to name names. Olivia Grégoire, minister delegated to SMEs, had summed up with an expression full of meaning: "name and shame". For France, the stakes are all the greater as, in a note published on June 26 , the International Monetary Fund (IMF) said that “profits account for 45% of the price increase since the beginning of 2022” in the euro area. Almost half of the inflation is therefore attributable to companies' strategy to increase their margins. This is why the multinationals have understood very well what is at stake. Even those who have withdrawn for the moment. Not with us. The reticents sent Centromarca ahead.

Claiming that they are different markets and products goes well in the conversations between buyers and the NKA of the industry at the negotiating table on price lists. Not between associative subjects who make politics and who, their reasons, must reiterate them at the common ministerial tables and not through their reference media. There is a country which, after the pandemic and the recovery, is preparing to return to work amidst various increases in fixed costs, attempts to recover margins too quickly, fuel and heavy shopping trolleys for low incomes and, while Federdistribuzione, Coop and Conad have declared their willingness to have a constructive confrontation, Centromarca insists on wanting to mark their unavailability for confrontation. Spin it however you want but this is the message that comes out.

Even in France Le Maire is basically aiming to give a strong political signal to the country. The request in Italy as in France is a commitment not to increase the price lists for the next few months. It is incomprehensible how the defenders of the position of the branded industry itself, who consider intervention superfluous because they predict that inflation will decrease on its own account, refuse to argue that this trend must be accompanied by a shared political act. Doesn't seem like a good idea to me. And, among other things, here, there are not even major censorship interventions for those who do not comply.

Beyond the Alps, fear of popular reactions to multinationals has made everyone more reasonable. Here, the food industry demonstrates that it does not understand what is at stake, as if we weren't in a situation of great political and social distress. An inflation that falls in the statistics often cited inappropriately but not in the pockets of families with salaries and pensions at stake calls for an effort of understanding and greater responsibility. Will everyone understand this sooner or later? I believe it will eventually be like this.

Inflation 2023 was a bit convenient for everyone. Less obviously to consumers especially those with low incomes. To the Government for the effect on VAT revenues and public finances. To both industrial and large-scale retail companies that have achieved interesting economic results (the IMF table demonstrates this) beyond the effects on volumes. Just as in industry, not all sub-sectors have had the same benefits. The probable decline in the next quarter will not weigh on consumers in the same way. So the "political" agreement is something different from the "laissez faire" to the market that those who oppose the agreement offer. Will it solve the root problem on the carpet? Of course not. In Italy as in France. However, it represents a sign of attention from the Government, an assumption of shared responsibility with businesses through their reference associations.

Of course, the government will be proud of it. Probably over the limit. But so be it. So from October a sticker that clearly indicates what is included in the operation, a targeted basket that accompanies the choices already in place in the large-scale distribution to be added to the card "dedicated to you" which, since 18 July, the Municipalities have sent households with an ISEE up to 15,000 euros with the required requirements. A postepay preloaded with the amount of 382.50 euros. Nothing shocking. I would personally add a call-out list as a deterrent. As they threaten to do in France. But I know there won't be.. Autumn is now around the corner with all the uncertainties on an economic and social level to which must be added those determined by the geopolitical situation. We try not to forget it.