August 2, 2013

France's pork buyers hold back

While consumers are trading down, French pork buyers are holding back.

Last week's Marché du Porc Breton's (MPB) auction price of €1.68/kilogramme (US$2.22) marked a €0.06/kilogramme (US$0.08) weekly rise against a long term upward trend since April.

Evidently, having had "reassuring news" from other pig production areas, those at the sale (including a MPB economist) were surprised that the slaughterers were sluggish in their bidding. As the only French pig auction to be reported nationally, it is possible that buyers might not want the headline price to be seen to rise unduly, even though markets across Europe have been strengthening. This year, MPB has seen fewer price swings and has generally traded above last year's rates, with around 9,000 fewer head presented every week than 2012.

French consumers, however, are trading down too: MPB quotes TNS panel data to April this year, noting a 2.6% on-year drop in fresh pork sales; a 7.3% lift in sausages and a 1.4% rise in charcuterie, 0.4% of that for ham.

As a department, the retailers argue that on the basis of 2011 figures, butchery counters are nearly 2% shy of making money on fresh meat, although charcuterie counters earned just over 5% net of everything. However, fresh meat counters, charcuterie and wet fish displays play a major role in animating stores and generating retail credibility.

What is more, consumers at a serve over will shop from higher margin categories elsewhere in the store, whereas high street butchers and charcutiers will not make incremental sales on the same scale.

Until recently, in-store butchery in France tended to be upscale. However, new store counters are noticeably less lavish and in-store butchery is an increasingly frequent victim in refits.