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Carrefour stops PepsiCo sales in Europe over “unacceptable price increases”

By Nithya Bose in Business News, posted January 8, 2024

Carrefour, a major French supermarket chain, is stopping thee sale of PepsiCo products, including Pepsi, 7up, and Lay's chips, citing "unacceptable price increases."

This decision, affecting stores in Italy, Spain, and Belgium, is the latest clash between retailers and suppliers over pricing.

Notices in French stores will inform customers of the brand's removal, apologizing for any inconvenience caused.

Carrefour's move is part of a broader strategy to pressure major consumer goods companies into reducing prices.

It followed hikes in response to escalating energy, commodity, and labor costs over the past two years.

Carrefour CEO Alexandre Bompard said that despite a fall in raw material costs, these companies are not cooperating.

In the past, Carrefour launched a "shrinkflation" campaign, highlighting size reductions in products despite sustained or increased prices.

PepsiCo's CEO, Ramon L. Laguarta, had previously acknowledged anticipating "higher inflation" during an October earnings call, signalling a continuation of elevated prices.

A statement from the company said: "We will continue to engage in good faith in order to try to ensure that our products are available."

Tensions between retailers and producers

The conflict reflects wider tensions between retailers and major consumer goods firms, with industry leaders such as Nestlé, Unilever, Coca-Cola, and Procter & Gamble implementing price hikes.

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This clash is not unique, as previous disputes between retailers and consumer goods giants have temporarily removed branded products from shelves.

In 2022, Kraft Heinz stopped supplying certain products to the UK's largest grocery retailer, Tesco, during negotiations, with Tesco deeming the price increases "unjustifiable."

The products were later restored with withdrawn price rises on Heinz's popular lines.

Beyond disputes, steep price hikes have prompted consumers to shift towards retailers' private-label products.

In line with this trend, Carrefour aims to significantly increase the share of private labels to reach 40 percent of sales over the next three years.

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