Steve Mollman
Thu, January 4, 2024
Thomas Samson—AFP/Getty Images
Carrefour is taking its spat with PepsiCo up a notch. No longer content to, as it did in the fall, label PepsiCo’s examples of “shrinkflation,” a nasty variant of inflation where the bag gets emptier while the price remains the same, or even increases, now the French grocery giant is doubling down. Starting Thursday with in-store signs that cite “unacceptable price increases,” the supermarket chain is telling shoppers in four countries that it will no longer carry PepsiCo products.
The changes start this week in France, Italy, Spain, and Belgium, meaning Cheetos, Doritos, and Quaker cereals will suddenly be harder to find there.
But this is just the latest clash between the two behemoths. In September, Carrefour started labeling egregious examples of shrinkflation on its shelves, with PepsiCo a prominent target. The labels read: “This product has seen its volume or weight fall and the effective price from the supplier rise.”
James Walton, chief economist at the Institute of Grocery Distribution, calls delisting a “last resort,” telling Reuters that “nobody wins if the goods that people want are not available on the shelves.”
But Carrefour has on its side European governments, which have been pressuring big companies to lower prices in the battle against inflation.
Carrefour CEO Alexandre Bompard argued last year that consumer goods companies were not cooperating with efforts to cut prices, despite the cost of raw materials falling. French finance minister Bruno Le Maire agreed, pointing a finger at PepsiCo, Unilever, and Nestlé, in particular.
“I don’t see why when prices go up companies pass on the increase immediately, but when the price of wheat falls, the price of pasta takes three months to fall. It’s unacceptable,” Le Maire said last April, warning, “I will use all the powers at my disposal to ensure that the big industrial companies pass on the decrease.”
France’s government has asked retailers and suppliers to finish their yearly price negotiations in January, a few months sooner than usual, Reuters reported. France is unusual in that it protects its farmers by forcing supermarkets to negotiate prices only once a year, and last year prices got locked in amid high inflation.
The shrinkflation campaign aimed to make suppliers rethink their pricing policies, but, judging by Carrefour’s move this week, it fell short with PepsiCo. And Carrefour isn’t the only supermarket chain taking a stand in Europe. Its Belgian rival Colruyt said that price disputes spurred it to stop supplies from Mondelez—the maker of Oreos and Philadelphia cream cheese. As Reuters reported, the grocer noted that with energy and raw material prices falling, rate hikes were no longer justifiable.
This story was originally featured on Fortune.com
France's Leclerc backs Carrefour in pressuring food producers
Reuters
Fri, January 5, 2024
FILE PHOTO: Michel-Edouard Leclerc, CEO and Executive Chairman of French retailer E. Leclerc SA, attends the third annual tech conference "Inno Generation" in Paris
LONDON (Reuters) - The chairman of France's biggest supermarket chain E. Leclerc called on all big consumer goods firms to lower their prices as he weighed in on competitor Carrefour's decision to drop Pepsico products amid fraught price negotiations.
Grocery retailers in several countries including Germany and Belgium have stopped orders of some products over the last year, a tactic in negotiations that inflation has made more combative.
In a post on LinkedIn, Michel-Edouard Leclerc said: "We must in the coming month convince all these big suppliers who made the mistake of overly increasing their prices, to lower them now, or moderate them."
France has been gripped by a debate over the price of staples, with retailers claiming producers' price increases are unjustified. The government has demanded retailers and suppliers finish annual price negotiations in January, two months earlier than usual, as it seeks to lower inflation.
Carrefour said its stores in France, Belgium, Italy, Spain, and Poland would no longer stock products including Pepsi, Lay's Crisps, Cheetos, and 7up because of "unacceptable price hikes".
Carrefour has more than 10,000 stores across the five countries according to its 2022 annual report, accounting for more than two-thirds of its global footprint.
In a statement, PepsiCo said: "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."
The French market as a whole accounted for just 1% of revenues for PepsiCo in 2022 according to Nielsen figures analysed by Barclays.
E. Leclerc did not immediately reply to a request for comment and questions about whether it would also withdraw Pepsico or any other products.
(Reporting by Helen Reid, additional reporting by Richa Naidu and Piotr Lipinski; editing by Barbara Lewis and Elaine Hardcastle)
Reuters
Fri, January 5, 2024
FILE PHOTO: Michel-Edouard Leclerc, CEO and Executive Chairman of French retailer E. Leclerc SA, attends the third annual tech conference "Inno Generation" in Paris
LONDON (Reuters) - The chairman of France's biggest supermarket chain E. Leclerc called on all big consumer goods firms to lower their prices as he weighed in on competitor Carrefour's decision to drop Pepsico products amid fraught price negotiations.
Grocery retailers in several countries including Germany and Belgium have stopped orders of some products over the last year, a tactic in negotiations that inflation has made more combative.
In a post on LinkedIn, Michel-Edouard Leclerc said: "We must in the coming month convince all these big suppliers who made the mistake of overly increasing their prices, to lower them now, or moderate them."
France has been gripped by a debate over the price of staples, with retailers claiming producers' price increases are unjustified. The government has demanded retailers and suppliers finish annual price negotiations in January, two months earlier than usual, as it seeks to lower inflation.
Carrefour said its stores in France, Belgium, Italy, Spain, and Poland would no longer stock products including Pepsi, Lay's Crisps, Cheetos, and 7up because of "unacceptable price hikes".
Carrefour has more than 10,000 stores across the five countries according to its 2022 annual report, accounting for more than two-thirds of its global footprint.
In a statement, PepsiCo said: "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."
The French market as a whole accounted for just 1% of revenues for PepsiCo in 2022 according to Nielsen figures analysed by Barclays.
E. Leclerc did not immediately reply to a request for comment and questions about whether it would also withdraw Pepsico or any other products.
(Reporting by Helen Reid, additional reporting by Richa Naidu and Piotr Lipinski; editing by Barbara Lewis and Elaine Hardcastle)
PepsiCo products are being pulled from some Carrefour grocery stores in Europe over price hikes
Fri, January 5, 2024
PARIS (AP) — Global supermarket chain Carrefour will stop selling PepsiCo products in its stores in France, Belgium, Spain and Italy over price increases for popular items like Lay's potato chips, Quaker Oats, Lipton Iced Tea and its namesake soda.
The French grocery chain said it pulled PepsiCo products from shelves in France on Thursday and added small signs in stores that say, “We no longer sell this brand due to unacceptable price increases.”
It comes as a new French law meant to fight the rising cost of living has supermarkets facing millions in fines if they don't reach a deal with suppliers on prices by the end of the month.
The ban also will extend to Belgium, Spain and Italy, but Carrefour, which has 12,225 stores in more than 30 countries, didn't say when it would take effect in those countries.
PepsiCo products were still on shelves Friday in Rome and Barcelona. Carrefour Italia’s press office said information will be posted for customers in their stores in Italy in the next days.
PepsiCo said in a statement that it has “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.”
The company behind Cheetos, Mountain Dew and Rice-A-Roni has raised prices by double-digit percentages for seven straight quarters, most recently hiking by 11% in the July-to-September period.
Its profits are up, though higher prices have dragged down sales as people trade down to cheaper brands. PepsiCo also has said it's been shrinking package sizes to meet consumer demand for convenience and portion control.
“I do think that we see the consumer right now being more selective,” PepsiCo Chief Financial Officer Hugh Johnston told investors in October.
The Purchase, New York-based company said price increases should ease and largely align with inflation, which has fallen considerably worldwide since crunched supply chains during the COVID-19 pandemic and then Russia's war in Ukraine sent prices surging.
However, the 20 European Union countries that use the euro currency saw consumer prices rise to 2.9% in December from a year earlier, rebounding after seven straight monthly declines, according to numbers released Friday.
Prices for food and non-alcoholic drinks have eased from a painful 17.5% in the 20-country euro area in March but were still up by 6.9% in November from a year earlier.
The government of French President Emmanuel Macron has fought back on the rising cost of living for households, passing a November law to implement “emergency measures” to fight high prices.
The law moved up annual negotiations between supermarkets and their suppliers on setting prices and more to Jan. 31 from March 1. Fines have been increased to 5 million euros ($5.5 million) for grocery companies that fail to meet the new deadline for setting prices.
Burt Flickinger III, managing director of grocery consultancy Strategic Resource Group, said he thinks PepsiCo was targeted because the company has been one of the most aggressive in raising prices. He thinks other big brand names could be next and that other European retailers could follow Carrefour's lead.
Pulling products off shelves over prices is rare, but it happens. Flickinger noted that Kraft Heinz stopped supplying British retailer Tesco with some of its items in 2022 for a week over a pricing spat.
Rob Dongoski, agribusiness and food lead in the consumer practice of management consultancy Kearney, said the showdown between the two big brands represents the ultimate test of customer loyalty.
“Are you loyal to your store or loyal to your brand?” he said.
In the U.S., several grocery sellers including Walmart have expressed displeasure at consumer product companies' moves to keep pushing up prices even as overall inflation has come down. Particular problem areas had been packaged foods and household goods.
Walmart's CEO Doug McMillon said in May that, “We all need those prices to come down."
Stew Leonard Jr., president and CEO of Stew Leonard’s, a supermarket chain with stores in Connecticut, New York and New Jersey, said in July that he warned the big consumer product companies that he wouldn’t accept any more price increases because he believed customers had reached a tipping point. But he noted on Friday that price increases have eased for many items, except for meat.
“It's hard to justify price increase when overall costs are coming down,” Leonard said.
For its part, PepsiCo has pointed to higher costs for grain and cooking oil for its rising prices. Costs for those food commodities surged following Russia’s invasion in Ukraine but fell considerably on global markets last year from record highs in 2022.
The U.N. Food and Agriculture Organization said Friday that its food price index was 13.7% lower in 2023 than the year before, but its measures of sugar and rice prices grew in that time. That overall relief still is not being felt by families at supermarkets.
___
Durbin reported from Detroit. Associated Press reporter Frances D’Emilio in Rome and AP Retail Writer Anne D'Innocenzio in New York contributed to this report.
Sylvie Corbet And Dee-ann Durbin, The Associated Press
Fri, January 5, 2024
PARIS (AP) — Global supermarket chain Carrefour will stop selling PepsiCo products in its stores in France, Belgium, Spain and Italy over price increases for popular items like Lay's potato chips, Quaker Oats, Lipton Iced Tea and its namesake soda.
The French grocery chain said it pulled PepsiCo products from shelves in France on Thursday and added small signs in stores that say, “We no longer sell this brand due to unacceptable price increases.”
It comes as a new French law meant to fight the rising cost of living has supermarkets facing millions in fines if they don't reach a deal with suppliers on prices by the end of the month.
The ban also will extend to Belgium, Spain and Italy, but Carrefour, which has 12,225 stores in more than 30 countries, didn't say when it would take effect in those countries.
PepsiCo products were still on shelves Friday in Rome and Barcelona. Carrefour Italia’s press office said information will be posted for customers in their stores in Italy in the next days.
PepsiCo said in a statement that it has “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.”
The company behind Cheetos, Mountain Dew and Rice-A-Roni has raised prices by double-digit percentages for seven straight quarters, most recently hiking by 11% in the July-to-September period.
Its profits are up, though higher prices have dragged down sales as people trade down to cheaper brands. PepsiCo also has said it's been shrinking package sizes to meet consumer demand for convenience and portion control.
“I do think that we see the consumer right now being more selective,” PepsiCo Chief Financial Officer Hugh Johnston told investors in October.
The Purchase, New York-based company said price increases should ease and largely align with inflation, which has fallen considerably worldwide since crunched supply chains during the COVID-19 pandemic and then Russia's war in Ukraine sent prices surging.
However, the 20 European Union countries that use the euro currency saw consumer prices rise to 2.9% in December from a year earlier, rebounding after seven straight monthly declines, according to numbers released Friday.
Prices for food and non-alcoholic drinks have eased from a painful 17.5% in the 20-country euro area in March but were still up by 6.9% in November from a year earlier.
The government of French President Emmanuel Macron has fought back on the rising cost of living for households, passing a November law to implement “emergency measures” to fight high prices.
The law moved up annual negotiations between supermarkets and their suppliers on setting prices and more to Jan. 31 from March 1. Fines have been increased to 5 million euros ($5.5 million) for grocery companies that fail to meet the new deadline for setting prices.
Burt Flickinger III, managing director of grocery consultancy Strategic Resource Group, said he thinks PepsiCo was targeted because the company has been one of the most aggressive in raising prices. He thinks other big brand names could be next and that other European retailers could follow Carrefour's lead.
Pulling products off shelves over prices is rare, but it happens. Flickinger noted that Kraft Heinz stopped supplying British retailer Tesco with some of its items in 2022 for a week over a pricing spat.
Rob Dongoski, agribusiness and food lead in the consumer practice of management consultancy Kearney, said the showdown between the two big brands represents the ultimate test of customer loyalty.
“Are you loyal to your store or loyal to your brand?” he said.
In the U.S., several grocery sellers including Walmart have expressed displeasure at consumer product companies' moves to keep pushing up prices even as overall inflation has come down. Particular problem areas had been packaged foods and household goods.
Walmart's CEO Doug McMillon said in May that, “We all need those prices to come down."
Stew Leonard Jr., president and CEO of Stew Leonard’s, a supermarket chain with stores in Connecticut, New York and New Jersey, said in July that he warned the big consumer product companies that he wouldn’t accept any more price increases because he believed customers had reached a tipping point. But he noted on Friday that price increases have eased for many items, except for meat.
“It's hard to justify price increase when overall costs are coming down,” Leonard said.
For its part, PepsiCo has pointed to higher costs for grain and cooking oil for its rising prices. Costs for those food commodities surged following Russia’s invasion in Ukraine but fell considerably on global markets last year from record highs in 2022.
The U.N. Food and Agriculture Organization said Friday that its food price index was 13.7% lower in 2023 than the year before, but its measures of sugar and rice prices grew in that time. That overall relief still is not being felt by families at supermarkets.
___
Durbin reported from Detroit. Associated Press reporter Frances D’Emilio in Rome and AP Retail Writer Anne D'Innocenzio in New York contributed to this report.
Sylvie Corbet And Dee-ann Durbin, The Associated Press
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