Brussels, 25 October 2023 – AIM, the European Brands Association, calls on the European Parliament to ensure a fact-based approach to the revision of the EU’s Geo-blocking Regulation, following the adoption of an own-initiative report in IMCO which reveals a worrying level of misunderstanding of market dynamics in the consumer goods sector.
Neither consumer prices, nor consumer price differences of products between countries, regions or even within cities can be attributed to suppliers of branded consumer goods. Retailers have the sole responsibility to set consumer prices for every single product on their shelves, both for their own private label products and for branded consumer goods. How they do this is determined by their own pricing and assortment strategies which are driven by competition in the specific market in question. Retailers are free to raise or lower the prices of branded consumer goods and will do so depending on where they want to drive sales at any given time.
“Setting consumer prices is in the hands of retailers, not suppliers; they decide to increase, or decrease, the price of all consumer goods on their shelves, both their own private label as well as our own branded consumer goods, depending on their pricing strategies, not their sourcing strategies” explained Michelle Gibbons, Director General of AIM. “If it were about sourcing, then there wouldn’t be consumer price differences on their own private label products across markets”.
Branded consumer goods manufacturers apply their expertise to each market in which they operate, employing people to take account of local consumer preferences and tastes, as well as national rules on issues such as labelling and packaging, for which they have legal responsibility. By law, they cannot set consumer prices. The wholesale price to retailers reflects many parameters, including promotions which are paid for by branded consumer goods manufacturers, one of the many ways in which manufacturers support consumers and households under pressure. AIM’s recently published European Consumer Goods Barometer shows that cost inflation continues to have a significant impact on the manufacturing process, with at least half of the companies surveyed experiencing inflation of over 50% inflation across all costs, with no less than 22% absorbing over 80% of these increased costs i.e. not passing them on to retailers. Although manufacturers have experienced increased production costs and have had to increase prices to cope, this is clearly not the only factor in higher consumer prices. 96% of manufacturers have seen retailers increase the consumer price of their products, with 28% saying that the consumer price has been increased at a higher level than the manufacturers’ price increase to retailers.
“Retailers may decide to offer our brands at a price beyond the wholesale price, as our survey discovered, because they know our brands are loved by consumers, and therefore they make more money per product sold” explained Michelle Gibbons. “Or, they decide to price them at a high level that makes their own private label products more attractive to consumers. It’s their choice as to where they decide to make their margins and obviously, because selling is a totally different business to manufacturing and production, they select what works best for their businesses”.
In December last year, on the eve of the anniversary of the Single Market, NERA Economic Consulting published a report, commissioned by AIM, which demonstrates the need for a fact-based discussion on the consumer goods industry, to provide even further benefits to consumers for the next three decades and beyond. The NERA report sets out the facts about how consumer goods are sold across Europe. Brand manufacturers’ structure their operations to deliver the best possible value to all stakeholders in the value chain, whilst remaining mindful of their legal obligations. NERA shows that although much is already in place, further regulatory hurdles need to be overcome to truly complete the Single Market.
For further information, please contact: Margherita Trombetti
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AIM (Association des Industries de Marque) is the European Brands Association, which represents manufacturers of branded consumer goods in Europe on key issues that affect their ability to design, distribute and market their brands. AIM’s membership comprises 2500 businesses ranging from SMEs to multinationals, directly or indirectly through its corporate and national association members.
More information: www.aim.be