Pepsi and Lay’s pulled from supermarkets in Europe over price increases

By Hanna Ziady, CNN

London (CNN) — Carrefour, one of France’s biggest supermarket chains, will stop selling PepsiCo products because they have become too expensive, in the latest clash between retailers and their suppliers over prices.

Stores are displaying a note alongside Pepsi, Lay’s chips, Quaker cereals and Lipton teas, among other products, that reads: “We are no longer selling this brand due to unacceptable price increases. We apologize for any inconvenience caused,” CNN affiliate BFM-TV reported.

Once the products sell out, they will not be replaced on shelves.

BFM-TV also reported that Carrefour would pull PepsiCo products from its stores in Italy, Spain, and Belgium, as well. CNN has contacted Carrefour for comment.

PepsiCo told CNN that it had been in discussion with Carrefour for many months and would “continue to engage in good faith in order to try to ensure that our products are available.”

The move marks an escalation in Carrefour’s attempts to pressure some of the world’s biggest consumer goods companies to cut their prices after hiking them over the past two years in response to soaring energy, commodity, and labor costs.

Reuters reported in September that the supermarket chain had started a “shrinkflation” campaign — slapping warnings on products ranging from Lindt chocolates to Lipton Ice Tea advising customers that they had shrunk in size, but still cost more, even though raw material costs had eased.

Prices of food commodities such as cereals, sugar and vegetable oils have fallen over the past 12 months. The food price index for December published by the UN Food and Agriculture Organization Friday was 10% down on the same month in 2022. For 2023 as a whole, the index was down nearly 14% on the average level the previous year.

Carrefour CEO Alexandre Bompard has repeatedly said consumer goods companies are not cooperating in efforts to cut the price of thousands of staples, despite the fall in the cost of ingredients.

But PepsiCo CEO Ramon L. Laguarta said on an earnings call in October that the company anticipated “higher inflation” in its business, which would keep prices elevated this year.

Preliminary data published Thursday showed inflation in France ticked up to 4.1% in December, from 3.9% in November. Food price inflation eased slightly from 7.7% to 7.1%, the country’s statistics agency said.

Nestlé, Unilever (UL), Coca-Cola (KO) and Procter & Gamble (PG) have all hiked prices on their products over the past two years, passing on increases in their own costs to shoppers.

That has led to some tense negotiations between retailers and consumer goods giants — and in some cases disputes that have seen branded products pulled from shelves for short periods.

During negotiations in 2022, Kraft Heinz (KHC) stopped supplying some products, including ketchup and baked beans, to the biggest UK grocery retailer Tesco. At the time, Tesco described the company’s price increases as “unjustifiable.” Once the products were restored, price rises were withdrawn on Heinz’s most popular lines.

Steep price hikes have also driven shoppers to retailers’ own brands, known as private-label products. Carrefour’s Bompard said last February that the company would “significantly increase” the share of its private labels to reach 40% of sales over the next three years.

Maya Szaniecki contributed to this article.

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