Spain’s supermarkets under fire although inflation means profit margins are dwindling

MERCADONA president Juan Roig recently introduced the New Economic Forum held in Valencia.

Days earlier Ione Belarra, Social Rights minister in the PSOE-Unidas Podemos coalition governing Spain, called Roig “a pitiless capitalist” who was currently “lining his pockets.”

Belarra, speaking in Zaragoza at a meeting of Podemos, the party to which she belongs, was not representing the national government at the time but her declaration immediately became a national issue.

Presenting the Forum Roig, whose supermarket chain has a 25 per cent market quota and employed 93,500 people in 2021, maintained that business-owners generated wealth and wellbeing.

“If those who manage the businesses know how to run them, there is prosperity for all.  If not, there is confrontation,” Roig said.

On leaving, he was besieged by reporters asking him about Belarra but he declined to answer their questions, smiling cheerfully and repeating, “Thank you, thank you.”

By the end of 2022, Spain’s Consumer Price Index (IPC) had risen to 15.7 per cent, compared with 20 per cent in Germany, 13 per cent in Italy and 12 per cent in France.

Nevertheless, as overheads rise for supermarkets and their suppliers the World Bank has warned that while energy prices remain high, “tension over prices could continue, to a greater or lesser extent until 2025.”

According to annual reports for 2021, the last available year, Mercadona had a 2.7 cent profit margin, with Carrefour reporting 4.6 per cent and Lidl 3.1 per cent, compared with the sector’s  2.3 per cent average nationally.

Initially the big chains absorbed the increases but have now been forced to pass them on to the consumer. The sector pointed out that higher prices have not brought more profits, particularly for own-label products, where increased sales mean a bigger margin for the manufacture rather than the distributor.

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