French supermarket drops PepsiCo, and it can happen in the U.S.

PepsiCo products are disappearing from the shelves of a major supermarket in France, and it’s not because the product is selling out due to high demand. Supermarket chain Carrefour in France has decided to halt sales of popular PepsiCo products such as Lay’s, Doritos, Lipton, Quaker products, etc. due to high prices, and the same can happen in the U.S.

The supermarket chain began hanging up signs in its stores in France on Jan. 4 in areas where PepsiCo products are sold that read: “We are no longer selling this brand due to an unacceptable price increase,” according to a report from The New York Times.

Related: Wall Street analyst believes Coca-Cola could be dethroned by longtime competitor

In an emailed statement to TheStreet, PepsiCo claims that it has been in talks with Carrefour over the matter for months.

“We’ve been in discussion with Carrefour for many months and we will continue to engage in good faith in order to try to ensure that our products are available,” said PepsiCo in the statement.

Carrefour did not immediately respond to TheStreet’s request for comment. 

France’s battle with food inflation

Food inflation has recently been on the rise in France, and reached an all-time high in March last year by reaching 15.90%. In December 2023, the cost of food in the country also rose by 7.10% compared to the same month in 2022.

In August last year, France’s finance minister Bruno Le Maire revealed that the number of price-capped products in supermarkets in the country will increase to 5,000 amid high food inflation after striking an agreement with food retailers and producers who agreed to either freeze or lower their prices on products. He also criticized PepsiCo and other companies for not cooperating with the agreement.

It is no surprise that Carrefour has decided to pull PepsiCo from its shelves as it warned in August 2023 that consumers in France are tightening their spending on essential items due to a high cost of living.

U.S. retailers’ fight against price hikes

The bold move from Carrefour could possibly also happen in stores in the U.S as prices for food are also on the rise. According to the latest Consumer Price Index report, food costs in the U.S. increased by 0.2% between October and November, with the prices for groceries increasing by 0.1%.

In 2018, Walmart pulled Campbell Soup Co.’s products from its stores due to a disagreement over pricing and promotions. Also, in 2022, a chunk of supermarkets in the U.S. such as Kroger and Giant Eagle also threatened to stop carrying certain products if food brands didn’t lower their prices.

“We don’t just accept cost increases,” said Don Clark, chief merchandising officer of Giant Eagle Inc., while speaking to The Wall Street Journal in 2022.

Price hikes from food brands can also threaten the livelihood of supermarkets as consumers have the power to pull back on their spending.

In November last year, Target CEO Brian Cornell revealed in an interview with CNBC that shoppers are spending less on groceries and that the company has taken a more “conservative approach” in planning inventory for 2023. 

Want to turbocharge your portfolio? Learn from the investing legends and get actionable insights. Start your Real Money Pro membership today. 

Related Posts