French retailer Carrefour has stopped selling all PepsiCo beverage products in its stores across the country due to a dispute over price increases imposed by the American food and beverage giant.
Carrefour Takes Stand Against ‘Unacceptable’ Price Hikes
Carrefour, Europe’s largest retailer, said PepsiCo’s price increases were “unacceptable” and went against the grocer’s policy of maintaining affordable prices for consumers facing high inflation and cost-of-living pressures. As reported by Reuters, PepsiCo wanted to raise prices by nearly 10% on products like Pepsi, 7Up and Mountain Dew, increases Carrefour felt were unjustified and excessively high.
The price hike dispute led Carrefour to remove all PepsiCo beverage items from shelves in its over 12,000 stores across France starting January 4th. Carrefour management framed the move as a “stand against unjustified price increases asked by certain manufacturers” and signaled they will not give in to attempts by companies like PepsiCo to raise prices at the expense of consumers.
A Carrefour store in France. The retailer has stopped stocking PepsiCo beverage products. (Photo: Getty Images)
PepsiCo Defends Price Increases As Justified
In response to Carrefour’s actions, PepsiCo defended its price increase demands as reasonable and pinned the blame on the French grocer for being “shortsighted”. As quoted by the Wall Street Journal, a PepsiCo spokesperson said “We believe our new prices are very reasonable and they reflect inflationary pressures that affect the entire industry.”
PepsiCo also accused Carrefour of taking an extreme approach instead of negotiating and claimed the retailer rejected “constructive proposals” during pricing discussions. A PepsiCo executive told Yahoo Finance that “We offer a wide range of products and price points. It’s short-sighted for them to take all of our beverages off the shelves instead of offering that choice to shoppers.”
Carrefour-PepsiCo Price War Escalates in France
The public war of words between Carrefour and PepsiCo represents an escalation of tensions between retailers and major consumer goods companies across Europe. Grocers are pushing back against price hikes from giant multinational corporations who are themselves facing higher costs.
According to reporting by Benzinga, the Carrefour-PepsiCo dispute reflects “growing price wars throughout the continent as grocers fight back against household names raising prices.” Food and beverage manufacturers increased prices over 10% on average last year, squeezing profit margins for supermarkets trying to keep consumer prices reasonable.
|2022 Price Increases
Average price increases imposed by major consumer product companies in 2022. Data source: MarketScreener
Carrefour Sets Precedent; Other Retailers Could Follow
Industry observers note that Carrefour’s drastic action establishes a precedent where retailers push back more forcefully against branded food & beverage companies’ price hikes. As reported by MSN Money, other major supermarket operators across Europe like Tesco, Aldi and Lidl could take a similarly hardline approach with vendors like PepsiCo, Nestle, and Unilever.
French economic leaders have also sided with Carrefour, applauding the retailer’s refusal to accept extreme price increases. France’s Minister of Economy Bruno Le Maire remarked “It’s essential that the big manufacturers of branded products don’t raise their prices too much.” This indicates the French government supports Carrefour’s motivations and could influence how other retailers proceed.
PepsiCo Risks Permanent Market Share Loss
By refusing to negotiate pricing and allow products back on Carrefour shelves, PepsiCo also jeopardizes long-term market share. As Europe’s #1 food retailer, Carrefour represents valuable distribution PepsiCo risks losing to competitors. A market analyst told Investing.com that if the dispute drags on, “consumers may swap to Coca-Cola beverages or private label products.”
There is also potential for the pricing clash to spread, with Carrefour potentially dropping PepsiCo snacks like Lay’s potato chips next. As noted by an FMCG industry expert quoted in FoodNavigator, “This latest flare-up with PepsiCo could be just the start of Carrefour playing hardball with the branded goods giants.”
The eventual outcome of the Carrefour-PepsiCo impasse remains uncertain. But the ripple effects across retail, other grocers following Carrefour’s lead, and consequences for PepsiCo’s market position could be significant. This high-profile price war highlights the growing tensions between retailers and major consumer product corporations over inflation and cost pressures.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.