French supermarket chain Carrefour has made the decision to stop selling PepsiCo products due to what it considers to be unacceptable price increases. The move comes as retailers clash with their suppliers over pricing. Carrefour stores in France will display a note alongside Pepsi, 7up, and Lay's chips, among other products, explaining the decision. The note reads, "We are no longer selling this brand due to unacceptable price increases. We apologize for any inconvenience caused." Reports suggest that Carrefour will also remove PepsiCo products from stores in Italy, Spain, and Belgium.
Carrefour's decision is part of its ongoing efforts to pressure major consumer goods companies to reduce their prices. Over the past two years, many of these companies increased their prices in response to rising energy, commodity, and labor costs. In September, Carrefour even launched a "shrinkflation" campaign, warning customers that products had reduced in size while their prices remained the same, despite a decrease in raw material costs.
Carrefour CEO Alexandre Bompard has expressed his frustration with consumer goods companies, claiming they have not cooperated in efforts to lower prices despite falling raw material costs. On the other hand, PepsiCo CEO Ramon L. Laguarta stated during an earnings call in October that the company anticipated "higher inflation" and expected prices to remain elevated in the coming year.
Inflation in France rose to 4.1% in December, up from 3.9% in November. Food inflation, however, decreased from 7.7% to 7.1%, according to preliminary data published by the country's statistics agency. This rise in overall inflation further adds to the tension between retailers and consumer goods giants who have passed on cost increases to shoppers.
Notably, other major companies such as Nestlé, Unilever, Coca-Cola, and Procter & Gamble have also raised prices on their products over the past two years. This has led to tense negotiations between retailers and these consumer goods giants, sometimes resulting in disputes and temporary removal of branded products from shelves.
In a similar situation, Kraft Heinz had stopped supplying certain products to Tesco, the UK's largest grocery retailer, during negotiations in 2022. Tesco described the price increases from Kraft Heinz as "unjustifiable." However, after the products were restored, price rises were withdrawn on Heinz's most popular lines.
The substantial price hikes on branded products have contributed to a surge in demand for retailers' own brands, commonly known as private-label products. Responding to this trend, Carrefour announced last year that it aimed to increase the share of its private labels to reach 40% of sales within the next three years.
The clash between retailers and suppliers over pricing continues, with Carrefour's decision to halt the sale of PepsiCo products marking a significant step in its efforts to fight against price increases. It remains to be seen how this situation will unfold and whether other retailers will follow suit. The industry will likely continue to navigate the delicate balance between maintaining profitability and meeting consumers' demands for affordable products.