Largest French Supermarket Chain Boycotts PepsiCo Due To "Unacceptable Price Increases"

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by Tyler Durden
Friday, Jan 05, 2024 - 10:45 AM

The global consumer is so tapped out, it's becoming virtually impossible to pass on constant price increases.

France's largest supermarket chain, Carrefour, is boycotting food and drinks manufacturing giant PepsiCo, pulling the company's snacks and soft drinks from store shelves due to recent price increases in the latest flare-up of a long-running clash between retailers and food companies over the cost of popular items.

Starting Thursday morning, the chain has removed PepsiCo items from supermarkets in France, and is placing banners in aisles for PepsiCo products such as Lay’s and Doritos crisps, and 7Up drinks and Lipton tea, advising customers: “We are no longer selling this brand due to unacceptable price increases,” a Carrefour spokesperson confirmed to news agency Reuters, adding the veto only applies to stores in France.

The supermarket giant’s latest backlash to consumer products manufacturers follows a ‘shrinkflation’ campaign launched in September, when PepsiCo was also targeted, along with Nestlé, Unilever and Lindt & Sprüngli. However, the US-based food and beverages producer has been singled out this time around, although as Just Food reports, it is unclear whether PepsiCo has been trying to force through further price increases for products sold in France.

The dispute with PepsiCo coincided with the issuance today of France’s latest inflation figures, which, while preliminary numbers for December, show food prices continue to rise at a faster pace than those in the wider economy. France’s national statistics body, Insee, said food prices likely rose at an annualised rate of 7.1% last month, easing slightly from 7.7% in November. That compares, for instance, to 12.1% in December 2022.

Nevertheless, food inflation remains at almost twice the rate of the government’s headline measure.

The French consumer price index increased 3.7% in the 12 months through December, up from 3.5% in November, Insee reported today for its provisional figures. In December 2022, the annualised rate stood at 5.9%. Month-on-month, overall inflation rebounded to a positive 0.1%, from a 0.2% decline in November, the statistics agency noted.

As reported previously, the French government has waged a campaign in recent months against both food retailers and their suppliers to bring down prices and ease the burden on consumers.

Authorities are now also joining Carrefour’s fight against shrinkflation, where manufacturers reduce pack sizes without necessarily making a corresponding drop in price. It has emerged that the government has reportedly applied to the EU to clear a move that would oblige grocers to tell consumers if a product has been reduced in size but its price has stayed the same.

Carrefour’s latest agitation against prices and the government’s plans on shrinkflation suggest concerns still remain about the pressures on consumers, despite food prices easing somewhat. Other supermarkets have also occasionally resorted to the more aggressive step of dropping products amid heated price disputes — notably when UK grocer Tesco Plc removed Unilever Plc’s Marmite spread from shelves in 2016. In a more recent price dispute in 2022, Mars Inc. stopped supplying two of its pet food brands to Tesco, while Kraft Heinz Co. withheld ketchup and baked beans.

When food inflation in France was still in double digits last August, Finance Minister Bruno Le Maire held talks with retailers and food producers to press for a reduction in consumer goods prices. The meetings followed a warning by Thierry Cotillard, the boss of the Les Mousquetaires supermarket chain, that people were cutting back on food purchases and shop prices were unlikely to fall until around March 2024.

Meanwhile, Carrefour’s own boss, CEO Alexandre Bompard, said in August consumers were curtailing purchases because of the impact of inflation on their spending power.