Pepsi has been pulled from supermarket shelves all over Europe over price increase. Carrefour, one of biggest supermarket chain in France, will stop selling PepsiCo products because they have become too expensive. This is the latest in clashes between retailers and their suppliers over price increases.
Stores in France will display a note alongside Pepsi, 7up and Lay’s chips, among other products, that reads: “We are no longer selling this brand due to unacceptable price increases. We apologize for any inconvenience caused,” as reported.
There has been no update from Carrefour and PepsiCo.
Pepsi price increase
The U.S. company said in October it planned “modest” price increases this year as demand held up despite rises, leading it to raise its 2023 profit forecast for a third consecutive time.
Over the past year, grocery retailers in several countries including Germany and Belgium announced they had stopped orders from consumer goods firms because of price rises, a tactic in negotiations that have become more fraught due to inflation.
French government’s efforts
In its efforts to lower inflation, the French government has asked retailers and suppliers to wrap up annual price negotiations in January, two months sooner than usual.
France is unusual in Europe in that it strongly regulates the retail sector, forcing supermarkets to negotiate prices only once a year with food and drink producers, in an attempt to protect its agricultural industry.
Carrefour’s pressure tactics
As reported on Thursday, Carrefour would pull PepsiCo products from stores in Italy, Spain, and Belgium, as well due to price hike.
The pulling of Pepsi from the supermarkets due to price increase marks an escalation in Carrefour’s attempts to pressure some of the world’s biggest consumer goods companies to cut their prices after hiking them over the past two years in response to soaring energy, commodity, and labor costs.
Shrinkflation
Reuters reported in September that the supermarket chain had started a “shrinkflation” campaign slapping warnings on products ranging from Lindt chocolates to Lipton Ice Tea advising customers that they had shrunk in size, but still cost more, even though raw material costs had eased.
Carrefour CEO Alexandre Bompard has repeatedly said consumer goods companies are not cooperating in efforts to cut the price of thousands of staples, despite a fall in the cost of raw materials, as per report.
Pepsi price increase due to inflation
But PepsiCo CEO Ramon L. Laguarta said on an earnings call in October that the company anticipated “higher inflation” in its business, which would keep prices elevated this year.
Preliminary data published Thursday showed inflation in France ticked up to 4.1% in December, from 3.9% in November. Food inflation fell from 7.7% to 7.1%, the country’s statistics agency said.
Other F&B companies price hike
Nestlé, Unilever (UL), Coca-Cola (KO) and Procter & Gamble (PG) have all hiked prices on their products over the past two years, passing on increases in their own costs to shoppers.
That has led to some tense negotiations between retailers and consumer goods giants and in some cases disputes that have seen branded products pulled from shelves for short periods.
Kraft Heinz and Tesco
During negotiations in 2022, Kraft Heinz (KHC) stopped supplying some products, including ketchup and baked beans, to the biggest UK grocery retailer Tesco. At the time, Tesco described the company’s price increases as “unjustifiable.” Once the products were restored, price rises were withdrawn on Heinz’s most popular lines.
Carrefour’s own brands
Steep price hikes have also driven shoppers to retailers’ own brands, known as private-label products. Carrefour’s Bompard said last February that the company would “significantly increase” the share of its private labels to reach 40% of sales over the next three years.
