Carrefour, one of Europe’s largest supermarket chains, has announced that it will stop selling popular PepsiCo products like Pepsi, Lay’s crisps, and 7up in several European countries due to price hikes.
Carrefour’s decision marks a new phase in the ongoing price negotiations between retailers and global food manufacturers.
Starting Thursday, Carrefour stores in France, Italy, Spain, and Belgium will display notices informing customers of the discontinuation of these brands, attributing it to “unacceptable price increases,” as stated by a spokesperson for Carrefour. In some stores, products like Cheetos and 7Up were already missing, while others, like Pepsi, remained available but accompanied by informational signage.
Broader Context and Industry Implications
PepsiCo had previously announced plans for “modest” price increases this year, prompting a revision of its 2023 profit forecast. This step comes amidst a wider trend where retailers like Germany and Belgium have halted orders from certain consumer goods firms due to price hikes. These actions reflect heightened tensions in price negotiations, exacerbated by rising inflation.
Carrefour has been particularly proactive in challenging price increases from major consumer product companies. In response to what is often referred to as “shrinkflation” – products decreasing in size but not in price – Carrefour initiated a campaign to inform customers of these changes. The French government has urged retailers and suppliers to conclude annual price negotiations earlier than usual to combat inflation.
France’s unique approach to regulating the retail sector includes annual price negotiations with food and drink producers to protect the national farm industry. However, amid the inflation crisis, the last round of negotiations resulted in widespread price increases, affecting supermarket turnover and driving the desire for price cuts in the current negotiations.
James Walton, the chief economist at the Institute of Grocery Distribution, notes that French supermarkets are particularly assertive in delisting products if terms are not favourable. However, this is generally considered a last resort due to the impact on consumer product availability.
* With an additional input from Reuters
