These include retail fresh fish counters and goats’ milk, as well as updating the existing meat and poultry datasets. Some refinements were made to the retail costing and pricing calculations, first carried out by FranceAgriMer with retailers’ assistance in 2012 and repeated with revised analysis in 2013.
Retail Pig Meat
From a retailer’s point of view, Chalmin’s analysis of pork loin pricing is uncontroversial, not to say friendly. Comparing first semesters for 2009 to 2012 and the first four months of 2013 would suggest that the retailer’s share of the average retail ticket of €6.87/kg had risen by about 12 per cent since 2009, while the producers’ share went up by about 18 per cent during the same time windows.
On the face of it, the full year figures for 2009 - 2012 would suggest the summer holiday price peak would favour producers but for two factors.
First, the FranceAgriMer economists appear to assume that retailers pay for promotional stock. Second, loins are strictly rationed: two per pig, no more, no less.
Since three quarters of supermarket pigmeat is loin-based (chops or roasting joints), ramping up retail demand accentuates the already skewed foundations of the retail trade.
But a real scissor effect in the figures for producer costs is clear for all to see, based on full year averages for 2009 to the first four months of 2013.
Between 2011 and Easter 2013, IFIP-calculated feed costs per kilo carcase weight rose from €1.00 to €1.20 while the pig price set out at €1.46 in 2011, peaked at €1.61 in 2012 before slumping to €1.57 in the opening months of 2013.
The comparable total production costs carried on rising from €1.49 in 2011; to €1.54 in 2012 and 1.69 in early 2013.
A similar squeeze on abattoirs and cutting halls, which have faced losses of €0.02 centimes/kilo deadweight during 2011 and 2012, according to FranceAgriMer.
Given the downturn in French clean pig numbers, this is not particularly surprising, especially since GAD had been running its abattoir at Lampaul-Guimilau below full capacity in the months running up to its closure this autumn.
Retail Butchery Charcuterie Fish Counters
It is common for French supermarkets, even in quite modest locations, to have extensive butchery departments. In recent years these have been scaled back dramatically, partly to reduce skilled staff requirements and partly to free up prime selling space.
One of the main purposes of dedicated serve-over counters in the retail environment is to provide an element of theatre and counter the notion that the store is run by shelf stackers.
There is also a degree of cross-over, in that staff on one counter will help to generate incremental sales elsewhere in the store. In addition, there will be cases where some instore butchery staff bone out and pack a proportion of stock sold from the self-service chillers.
The butchery counters are significantly dearer to stock than the charcuterie counters, which also have lower skill requirements.
These two factors alone help to explain why butchery counters, on average, turn at a small loss, while charcuterie counters showed post tax profits of five per cent to six per cent on the category.
It should be noted that staff on loss-making counters represent a modest tax break since they generate a job-related tax refund (see butchery and fish tables) whereas the jobs on the profitable charcuterie counter attract tax as a deduction in the normal way.
The visual impact of a wet fish counter goes a long way towards explaining why this particular retail landmark is retained. There is no point in displaying round fish without having a trained staff who can prepare and fillet fish in front of the customer as needed.
Chalmin’s team found that fish counters cost more to staff (€15.3 per €100 in sales) than the butchery counters and collectively run at a loss of nearly four per cent (net of everything). Specialist fish retailers have no room to indulge in window dressing and live (almost literally) on knife edge margins. According ESANE (a specialist unit within the government statistics service INSEE.) figures, stock accounts for around 64 per cent of total running costs, staff a further 17 per cent, generating fully net margins in the order of two per cent.
Chalmin settled on a single species, whiting, as the lowest common denominator of multiple retailers’ fish sales through the different stages of the journey from dockside auction to retail shelf.
The analysis splits out the fish merchant’s auction price as a producer price for the fish, before adding back in the price of any filleting, packing and haulage carried out by the fish merchant.
FranceAgriMer gives (GEM data) the 2012 pricing a yearly average of €3.80 at auction, €4.10 gross margin to the fish merchant and €4.10 gross margin to the retailer: with VAT the economists arrive at a synthesised retail price of €12.7/kg. The equivalent specialist retail price is estimated at €15.8, with a more complex supply chain that involves a wholesale link.
Multiple retailers are taking gross margins of around a third, compared to the 40 per cent taken by the specialist retailers who end up with a paper thin profit over the year, as mentioned elsewhere.
The buying power of the multiples is clear, since they have simplified their supply chains with direct deliveries of wet fish to stores: however, they do not need to compete directly with specialist fishmongers, because capturing the footfall generates incremental sales that will more than cover loss-leading counters.
The transition between 2011 and 2012 in retail poultry meat was one of consolidating margins, literally at the expense of producers.
In 2011, producer prices per kilo at the abattoir gate were €0.89/kilo for birds that cost €0.95 to produce, before paying hired hands to bring the total production cost to €0.98. Feed costs have been the main cause of a further €0.07 rise in 2012, which has continued into the first four months of 2013, when producer prices averaged €1/kg for total production costs of €1.07/kg.
For the FranceAgriMer team, poultry meat was identified as one of the most profitable categories in their broadly-based study.
The staffing requirements are simple and based on keeping chillers filled. Promotional activity caused variations in average price calculations that kept the economists busy, since they still have no mechanism for calculating margins on the basis of who pays for promotional stock.
AgriFranceMer reports that 2012 saw fewer cattle on the market and a rise of €0.54/kilo in deadweight prices.
Retailers and suppliers absorbed some of this increase, putting up the average retail by €0.34/kilo year on year.
The opening months of 2013 saw a steady tightening of the pattern, with a closing gap: a rise of €0.48 in the deadweight prices translated into a €0.46 retail price rise.
Grass-based cattle holdings fared better than more intensive finishers, whose external input costs were at the mercy of cereal prices.
Slaughterers and processors saw average net margins slide from four centimes/kilo to just one centime/kilo in 2012. The supermarket butchery counter data reflect all the species sold, so price movements within species or changes in product mix are not measurable.
On the basis of the FranceAgriMer data, however, it is clear that cattle prices at the abattoir door trailed behind production costs by anything up to 20 per cent between 2008 and 2012.
In turn, it was easier for retail prices to stay ahead of artificially low raw material prices until the latter half of 2012. Since the retail margins are based on carcase equivalent figures, there is also a good chance that the retail product mix may understate the number of animals raised to generate the carcase equivalent tonnages.
FranceAgriMer recognises the internal coupling of products within the dairy industry (eg butter:powder or standardised liquid milk:cream) and tries to bring some order to the apparent chaos.
What is striking in the FranceAgriMer butter price analysis is that over a year, the retail margin moves by no more than 5% and a wide ranging difference is accommodated in the gross margins on processing.
UHT semi skimmed milk, a known value item (kvi), on the other hand presents an almost unchanging distribution of shares in the retail price across the year. The picture is more confused with first semester data, since processors are buying against higher spring production volumes rather than the relative scarcity at the back end of the year.
Processors’ investment in yogurt and branding would appear to be paying off, according to FranceAgriMer data on plain yogurt retail price shares.
The retail price points appear to be stable at around €1.60 /kg, of which around €0.90 goes to processors. Once again, however, in such a busy category for branded goods, there is no way that FranceAgriMer can track the volume of promotional stock or who might fund supposedly free product.
As far as milk production is concerned, the FranceAgriMer economists have no trouble spotting that without subsidies there would be no milk to trade. Since physical production can only be the result of past inputs, agriculture cannot be compared to a factory, which can shut down at Christmas and re-open as normal days later.
You can view the full report in French by clicking here.