Carrefour in France chases away PepsiCo: unjustified price increases

The products of some famous brands are now unobtainable in Carrefour supermarkets in France, and this is part of an attempt on the one hand to fight inflation and on the other to give a positive price image to the French chain.

The commercial distribution group has decided to remove from its shelves all the products of the American Pepsico, which produces well-known brands such as Pepsi and 7UP, because it judged the multinational's increases to be unjustified, at the end of a negotiation that ended badly.

The method may seem brutal, but it is not unprecedented. It's part of the fairly regular tensions between large-scale distribution and producers, but in this case the game appears much more serious. Usually these strategies do not last long, a few weeks at most , but it does not mean that the distribution group does not want to make these drinks an example for all producers.

An aggressive communication on the shelves.

There is no shortage of examples. Rainett cleaning products were gradually withdrawn from the shelves of Leclerc, Carrefour, Intermarché and Casino in 2022, with no new orders placed once stocks ran out. Last summer, Ricard bottles were gradually withdrawn from Leclerc stores. The same happened in September in some Intermarché stores for Evian, Badoit and Volvic waters, owned by the Danone group.

Each time, aggressive posters accusing the manufacturer of demanding unsustainable price increases to the detriment of consumers were plastered in front of the empty shelves. In a slightly different genre, but with the same philosophy, Intermarché attacked Findus, Knorr and Le Petit Marseillais last November for "shrinkflation", which consists in reducing the quantity of a product without lowering its price, always with posters on the shelves .

The government intervened, making the situation worse

This year, things have become particularly complicated because the French government has intervened by changing the deadlines for concluding commercial contracts, making negotiations very short by law, according to what has emerged from operators in the agri-food sector.

The shorter time to reach an agreement – ​​until January 15th instead of March 1st for smaller companies and until January 31st for large groups – means that discussions are automatically closer. “If before there were up to twelve negotiation rounds with each retailer, now we will only have three or four,” says a small food company who wishes to remain anonymous.

The shorter times then collided harshly with, on the one hand, the desire of commercial distribution to improve their margins, in the face of increased distribution costs, and on the other the industry which found itself having to increase prices to faced with increases in their costs. There are products, such as chocolate and olive oil, where international prices have required significant increases. Short time and conflicting interests led to incidents like the Pepsi one.

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The article Carrefour in France drives out PepsiCo: unjustified price increases comes from Economic Scenarios .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/192094-2/ on Fri, 05 Jan 2024 08:00:22 +0000.