Global supermarket chain Carrefour has announced that it will no longer be selling PepsiCo products in several European countries due to price increases. The French grocery chain has already removed PepsiCo products from its shelves in France and has displayed signs explaining the decision to customers. The ban will also be implemented in Belgium, Spain, and Italy, although the timing for those countries has yet to be announced.
PepsiCo has acknowledged the move by Carrefour and stated that it has been in discussions with the supermarket chain to try and ensure that its products remain available. The company has been raising prices by double-digit percentages for seven consecutive quarters, which has had a significant impact on sales. In addition, PepsiCo has been responding to consumer demand for convenience and portion control by reducing package sizes.
It is not just PepsiCo that has been adopting such strategies. Many food producers have been shrinking packaging while maintaining the same price due to supply chain disruptions caused by the ongoing COVID-19 pandemic. This has led to accusations against some of the world’s largest retailers of using inflation as an excuse to increase prices and boost profits.
In light of these allegations, the Federal Trade Commission (FTC) has launched an investigation into the profit margins of major retailers and consumer-goods companies, including Amazon, Kroger, Walmart, Kraft Heinz, and Procter and Gamble. As for PepsiCo, the company expects that the price increases will eventually ease and align with inflation as supply chains recover from the impact of the pandemic and Russia’s invasion of Ukraine.
In European Union countries, consumer prices saw a year-on-year increase of 2.9% in December. While prices for food and non-alcoholic drinks have decreased from a high of 17.5% in the 20-country euro area, they were still up by 6.9% in November compared to the previous year. PepsiCo attributes its rising prices to higher costs for grain and cooking oil, which saw a surge following Russia’s invasion of Ukraine.
However, according to the U.N. Food and Agriculture Organization, global food commodity prices actually fell considerably in 2023 compared to the record highs seen in 2022. This raises questions about the true factors driving PepsiCo’s price increases.
As Carrefour takes a stand against rising prices and removes PepsiCo products from its stores, the future of the relationship between the two companies remains uncertain. Only time will tell if PepsiCo’s prices will indeed align with inflation, as the global supply chains continue to recover from the various challenges they’ve faced in recent years.
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