Carrefour halts sales of PepsiCo snacks and beverages in France, Spain, Italy and Belgium
French supermarket giant Carrefour has stopped selling PepsiCo products in its stores across France, Spain, Italy and Belgium due to a dispute over price increases imposed by the food and beverage manufacturer.
The removal impacts PepsiCo brands such as Pepsi, 7Up, Lay’s potato chips, Doritos and more. Carrefour stated that it “no longer wishes to sell products supplied by PepsiCo” due to the company imposing price increases that appeared “unjustified” given high profits and inflation costing consumers.
Background of Rising Prices and Record Profits
The price dispute comes amid rising inflation and costs for consumers across Europe. At the same time, PepsiCo reported $8.71 billion in net profits for the third quarter of 2023, setting a new record that exceeded analyst expectations.
PepsiCo and other major consumer brands have been increasing prices over the past year, in some cases reducing package sizes (“shrinkflation”) while raising costs per ounce or unit. Carrefour framed this move as putting profits over the well-being of consumers facing economic struggles.
“It’s an unprecedented and aggressive move from Carrefour against PepsiCo to publicly challenge price increases that aren’t justified,” said retail analyst Maxime Fontaine. “Carrefour is positioning themselves firmly on the side of stretched consumers.”
Immediate Impacts and Reactions
The removal of PepsiCo products leaves noticeable gaps on Carrefour shelves and has customers wondering what popular brands will remain available for purchase. “I was shocked to see empty spaces where Pepsi and Doritos bags usually are,” said Carrefour shopper Claude Dubois. “Carrefour must drive a hard bargain.”
In a statement, PepsiCo said it aims “to balance affordability and consumer demand in a highly inflationary environment” and is “disappointed by Carrefour’s damaging statements and unilateral action.” No timeline has been given for when PepsiCo products might return to Carrefour’s over 12,000 stores across Europe.
Carrefour stated they are standing up for shoppers and will not accept “unjustified and unreasonable” price hikes from suppliers. “We are completely determined,” said a Carrefour spokesperson. The company indicated other major brands should take notice that they will fight against price gouging in this economic climate.
Potential Wider Impacts and Precedents
- This pricing dispute between two retail giants could set off heightened tensions between consumer brands and retailers. Other chains may feel emboldened to take a stand.
- There are concerns PepsiCo may retaliate by restricting other products supplied to Carrefour, narrowing choice and options for shoppers.
- In 2022, Carrefour engaged in a similar public battle with Danone over yogurt pricing, leading Danone to eventually lower costs to secure shelf space. That dispute boosted Carrefour’s populist reputation.
- This move aligns with the French government’s push against companies who impose unwarranted price increases while benefiting from inflation. Firms who cooperate with authorities have their energy costs capped.
“This could be the first missile launched in a pricing war between retailers and major consumer brands across Europe,” said industry analyst Pierre Lagrange. “Both sides feel they have public sentiment on their side heading into 2024 during a strained economic period. Consumers ultimately want affordable choice.”
Projections on Outcomes and Lasting Impacts
It remains to be seen how long PepsiCo products will remain unavailable at Carrefour locations and who will blink first in the standoff over pricing issues. Industry experts predict:
- The removal of strong-selling PepsiCo brands will likely impact Carrefour revenues in the short term. But boosted public goodwill could increase customer loyalty long term if they feel Carrefour has shopper interests in mind.
- Other large supermarket chains may look to follow Carrefour’s lead, expanding the scale of pressure on consumer giants like PepsiCo.
- Facing pushback from more retailers, PepsiCo will eventually need to come back to the negotiating table and may end up reducing or reversing some of its attempted price increases across Europe.
- This dispute could encourage the acceleration of retailer own-brand products as alternatives to traditional consumer giants. Deep discount chains like Aldi and Lidl may also see a boost from shoppers impacted by rising prices.
“This is far bigger than just two large companies squabbling over product margins,” said economist Marc Dujardin. “It encapsulates so much of the economic tension across Europe – between producer power, consumer pain, government intervention and market instability. The outcome will reveal pressures that extend far beyond soda pop and potato chips.”
The eventual ramifications remain to be seen but Carrefour’s drastic action already shows they plan to take a highly public hard line against major brands raising prices to levels felt unjustifiable for shoppers. For PepsiCo, it poses a dilemma over balancing profit ambitions with political and consumer headwinds over affordability concerns.
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