PARIS (AP) — Global supermarket chain Carrefour is cutting prices at stores in France, Belgium, Spain and Italy due to price hikes on popular products such as Lay's potato chips, Quaker Oats, Lipton tea and its namesake soda. Discontinue sales of PepsiCo products.
The French grocery chain announced Thursday that it has removed PepsiCo products from its shelves in France and placed small signs in its stores that read, “Due to unacceptable price increases, this brand will no longer be sold.”
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It comes as supermarkets face multimillion-dollar fines if they fail to reach agreement on prices with suppliers by the end of this month, under a new French law aimed at combating rising costs of living. It happened while I was there.
The ban will be extended to Belgium, Spain and Italy, but Carrefour, which has 12,225 stores in more than 30 countries, did not say when it would come into effect in those countries.
PepsiCo products were still on shelves in Rome and Barcelona on Friday. Carrefour Italia's press office said information for customers will be posted in stores across Italy within the next few days.
“We have been in discussions with Carrefour for many months and continue to work in good faith to ensure the availability of our products,” PepsiCo said in a statement.
The company, which makes Cheetos, Mountain Dew and Rice-A-Roni, has raised prices by double-digit percentages for seven consecutive quarters, most recently by 11% from July to September.
Profits are rising, but soaring prices are hurting sales as people switch to cheaper brands. PepsiCo also said it is reducing package sizes to meet consumer demand for convenience and portion control.
“We now see consumers becoming more selective,” PepsiCo Chief Financial Officer Hugh Johnston told investors in October.
New York-based Purchase Inc. said price increases should be moderate and roughly in line with inflation. Inflation has fallen sharply globally since the coronavirus pandemic strained supply chains and then Russia's war in Ukraine sent prices soaring.
But consumer prices in the 20 European Union countries that use the euro currency rose to 2.9% year-on-year in December, rebounding after seven straight months of declines, according to figures released on Friday. .
Food and non-alcoholic drink prices in the 20 euro zone countries were still up 6.9% year-on-year in November, although this was down from a pitiful 17.5% in March.
French President Emmanuel Macron's government passed a law in November to implement “emergency measures” to combat high prices, countering rising living costs for households.
The law brings forward annual negotiations between supermarkets and their suppliers on matters such as pricing from March 1st to January 31st. Fines for grocery companies that fail to meet new deadlines for setting prices have been increased to 5 million euros ($5.5 million).
Bert Flickinger III, managing director of food consulting firm Strategic Resource Group, said PepsiCo may have been targeted because it has been one of the most aggressive companies in raising prices. I asked if there was any. He believes other big brands could be next, and that other European retailers could follow Carrefour's lead.
Removing products from shelves because of price is rare, but it does happen. Flickinger noted that Kraft Heinz stopped supplying some products to British retailer Tesco for a week in 2022, citing a price dispute.
In the United States, several grocery retailers, including Walmart, have expressed displeasure at consumer product companies' continued efforts to jack up prices even as overall inflation has declined. Particularly problematic were packaged foods and household goods.
“We all need these lower prices,” Walmart CEO Doug McMillon said in May.
Stu Leonard Jr., president and CEO of Stu Leonard's supermarket chain with stores in Connecticut, New York and New Jersey, warned the consumer goods giant in July that it would not raise prices any further. He said he warned him that he would not accept the offer. Customers believed they had reached a tipping point. But he noted on Friday that price increases had eased for many items except meat.
“It's hard to justify a price increase when overall costs are going down,” Leonard said.
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Meanwhile, PepsiCo points to rising costs of grain and cooking oil as the reason for the price increase. The cost of these foods skyrocketed in the wake of Russia's invasion of Ukraine, but they fell sharply on the global market last year from their record highs in 2022.
The Food and Agriculture Organization of the United Nations announced on Friday that the food price index for 2023 fell by 13.7% from the previous year, while the sugar and rice price index increased during that time. Families in supermarkets still don't feel that general sense of security.
