French retailer Carrefour drops PepsiCo products over high prices

French food retailer Carrefour has said it will no longer sell PepsiCo products because they have become too expensive, marking the latest spat between food manufacturers and retailers over high food prices.

The supermarket chain will from Thursday stop stocking PepsiCo products such as Doritos crisps and 7Up, and will add signs to shelves at its stores in France explaining to customers that it is no longer selling the brand because of “unacceptable price increases”. 

PepsiCo products were in the process of being removed from Carrefour’s ecommerce sites, though some existing stock might still be visible in stores, a person with knowledge of the process said.

“The negotiations with PepsiCo have been complex, to put it politely. We are looking to lower prices this year in line with global trends, but PepsiCo are demanding price increases instead,” the person said. 

PepsiCo did not respond to a request for comment. 

France’s food retailers and industrial producers are locked in annual negotiations to set food prices, which are due to be wrapped up by the end of January — two months earlier than usual. The government has this year mandated that talks be wrapped up sooner than normal so that consumers can benefit from lower prices as food inflation falls. 

Carrefour would not give a number for the average increase demanded by PepsiCo in negotiations for the coming year, which have been under way for a month. However, Coca-Cola, another big US food producer, has said it wants to increase its prices by 7 per cent in France next year, a stance that has also led to fraught negotiations with French retailers, the person said. 

Carrefour’s decision to stop stocking PepsiCo products is not the first time such tactics have been deployed by retailers seeking leverage in negotiations with suppliers. In September, Carrefour started putting “shrinkflation” labels on products that had shrunk in volume but maintained or increased in price on its shelves, to alert customers. PepsiCo’s Lipton ice tea and Unilever’s Viennetta ice cakes were among the items targeted in the campaign. 

Leclerc, another big French supermarket chain, said it would stop carrying products from drinks maker Pernod Ricard over the summer after a failure to agree on prices, though the items have since made a return to its shelves. British supermarket chain Tesco had a similar falling out with Heinz over the price of beans and ketchup in 2022. 

In November, the Greek government fined the local branches of Procter & Gamble and Unilever €1mn each for breaching laws on gross margins.

Negotiations between food producers and retailers are particularly fraught in France, where the government plays an active role in the once-a-year price-setting exercise. Finance minister Bruno Le Maire has threatened to impose special taxes on food companies that do not pass on lower prices to consumers in order to claw back “undue” profits as their costs have fallen. 

The French government this week submitted proposals for a wider “shrinkflation” labelling campaign at supermarkets, which officials hope to launch in March, to authorities in Brussels to ensure compliance with EU regulations. 

France’s food retailers complain that their margins are being squeezed while industrial groups continue to profit from higher prices. During its most recent trading update, PepsiCo raised its 2023 profit forecast for the third consecutive time after raising prices an average of 11 per cent in the three months to September. 

“The general sentiment going into the 2023 negotiations from French retailers is that the big industrials gained too much margin last year. The feeling is that it can’t happen again this year,” the person said. 

New data from Insee, France’s statistics office, on Thursday showed that while consumer prices were 4.1 per cent higher in December than the year before, food inflation had fallen from 7.7 per cent in November to 7.1 per cent in the last month of the year. 

High food prices have put pressure on households already struggling with soaring energy costs. They have also contributed to declines in the volume of food bought by French consumers of between 4 and 5 per cent in the first eight months of 2023 compared with a year earlier, according to Kantar. However, volumes were only down 0.5 per cent compared with 2019 as lockdown shopping habits reverted towards pre-pandemic patterns.