How to Win a Baguette War

The French crunch through record setting numbers of baguettes. At 320 every second, France’s 67 million people down one half a baguette a day (13 inches of a 26-inch loaf). According to France’s Bread Observatory, the country consumes 10 billion baguettes a year.

Now though, France’s bakers have a problem.

Baguette Prices

At the end of last October, France’s boulangeries (bakeries) told customers that baguette prices could rise 3 to 5 centimes (4 to 6 cents). For a standard 90 centimes baguette (close to one dollar), this 5% increase was unusual because, for two decades, its price had barely budged. But now, as the bakers explained, the cost of wheat and energy was pushing up their expenses.

At the same time, the French supermarket chain, Leclerc (saying it was fighting inflation) set its baguette price at a rock bottom 29 cents–10 cents less than competing supermarkets. Even the upscale food store, Carrefour, asked a relatively low 45 cents for its baguettes.

Responding, five industry groups, including the National Confederation of French Bakery and Pastry Shops, said the prices were “shameful, “destructive,” and demeaning. One representative pointed out that so low a price meant it cost as little as 10 cents a day to eat a half a baguette.

Our Bottom Line: Price Floors

The texture of the baguette was created by a baker from Vienna in 1839. Then, approximately 80 years later, a government regulation said bakers could not work before 4 a.m. Needing some way to bake their bread before morning, someone thought of the long thin shape.

I wonder if they could possibly want more regulation now through a price floor. As a horizontal line above equilibrium the floor shows a price preserved by government. You can see that the floor is above the equilibrium price:

To win the price war, the bakers would just want a price freeze above equilibrium.

My sources and more: Investigating the baguette price war, I found articles here, here, and  here.

Though not at all exact, the value of a centime is close to a cent. Please note also that our featured image is from Pixabay.