Carrefour flexes retail muscle, ousts Pepsico over unacceptable price hikes across Europe: WSJ

New Delhi [India], January 5 : Carrefour, one of the world's largest supermarket chains with a significant presence in more than 30 countries, has announced its decision to stop selling several PepsiCo products in France, Italy, Spain, and Belgium.
According to a report by Mauro Orru and Jennifer Maloney, published in The Wall Street Journal, the move comes as a protest against what Carrefour deems as unacceptable price increases by PepsiCo, marking a rare public standoff between a major grocer and a food giant amid a prolonged period of rising prices globally.
The affected products include popular items like Lay's, Doritos, Cheetos chips, Benenuts snacks, Alvalle gazpacho, Lipton teas, Pepsi, 7 Up soft drinks, and Quaker foods.
Carrefour plans to add notes to store shelves, explaining the changes to its customers. The decision to drop these products follows months of discussions between Carrefour and PepsiCo.
A spokesman for Carrefour emphasized that the supermarket chain had engaged in discussions with PepsiCo for an extended period, and their intention is to ensure that consumers have access to a fair pricing structure.
The notes to customers will provide clarity on the decision and the affected product range.
In response to Carrefour's move, a spokeswoman for PepsiCo stated, "We've been in discussion with Carrefour for many months and we will continue to engage in good faith in order to try to ensure that our products are available."
PepsiCo's finance chief, Hugh Johnston, had earlier indicated that the company expected a slowdown in product price increases in 2024, aligning more closely with the overall rate of inflation.
The company had witnessed two years of significant price hikes on its soft drinks, snacks, and packaged foods. PepsiCo, set to report its latest quarterly results next month, has projected earnings growth of 13 per cent and revenue growth of 10 per cent for 2023, excluding currency impacts.
The decision by Carrefour is not only a reflection of their concerns about rising prices but also an assertion of their commitment to ensuring fair pricing for consumers.
In a broader context, other supermarket operators in the U.S. have also expressed apprehensions about escalating prices in certain product categories despite a general slowdown in the overall rate of inflation.
Europe, which represents about 14 per cent of PepsiCo's global revenue, has seen heightened food-price inflation, particularly in countries like France.
Carrefour's stance comes after the retailer began attaching labels to products it claims are subject to "shrinkflation" -- a phenomenon where the quantity of a product decreases in its packaging while the retail price remains unchanged.
Carrefour's decision to drop PepsiCo products underscores the complex dynamics between retailers and food manufacturers as they navigate the challenges posed by economic uncertainties and consumer demands for fair pricing.