In a bold move, global retail giant Carrefour has announced the discontinuation of PepsiCo products in its stores across France, Belgium, Spain, and Italy. The decision, effective immediately in France, stems from what the French grocery chain deems “unacceptable price increases” on popular items such as Lay’s potato chips, Quaker Oats, Lipton tea, and Pepsi itself.
On Thursday, Carrefour removed PepsiCo products from its shelves in France and strategically placed small signs in stores proclaiming, “We no longer sell this brand due to unacceptable price increases.” While the ban is set to extend to Belgium, Spain, and Italy, the supermarket giant, with a sprawling presence in over 30 countries and 12,225 stores, has not disclosed the timeline for implementation in these regions.
PepsiCo responded to the move in a statement, revealing ongoing discussions with Carrefour over the past several months. The multinational company, known for brands like Cheetos, Mountain Dew, and Rice-A-Roni, has experienced a consistent surge in prices, with seven consecutive quarters of double-digit percentage increases. The most recent hike, 11% from July to September, has impacted consumer behavior, causing a shift towards more budget-friendly stores.
While PepsiCo acknowledges the rising costs of raw materials such as grain and cooking oil, attributed to geopolitical events like Russia’s invasion of Ukraine, the company maintains that it is actively working to align its pricing strategy with inflation. Despite the global fall in inflation rates due to stabilized supply chains post-COVID-19 and the resolution of conflicts in Ukraine, consumer prices in the eurozone rose to 2.9% in December from a year earlier.
Food and non-alcoholic drink prices, which experienced a staggering 17.5% surge in March, have somewhat eased but remain elevated, standing at 6.9% higher in November compared to the previous year. PepsiCo Chief Financial Officer Hugh Johnston acknowledged the changing consumer landscape, stating in October, “I do think that we see the consumer right now being more selective.”
The Purchase, New York-based company anticipates that the impact of price increases will ease, aligning itself with the overall decline in global inflation. However, the situation in the 20 European Union countries that use the euro currency presents a challenge, with consumer prices rebounding to 2.9% in December.
Contrary to PepsiCo’s rationale, the United Nations Food and Agriculture Organization reported a 13.7% decrease in its food price index for 2023 compared to the previous year. The drop indicates a departure from the record-high prices observed in 2022. Notably, sugar prices were the only category that experienced growth during this period.
As Carrefour takes a stand against what it perceives as unjustifiable price hikes, the move could have broader implications for the ongoing tug-of-war between retailers and suppliers over pricing strategies. The decision to discontinue PepsiCo products highlights the delicate balance between meeting consumer demand, managing production costs, and responding to geopolitical events that impact the global supply chain.
Consumers in France, Belgium, Spain, and Italy may now find themselves seeking alternatives to their favorite PepsiCo products as they navigate the evolving landscape of consumer choices and corporate pricing strategies. Only time will tell whether this development sparks a wider conversation about the power dynamics within the global retail and food industry.
