PepsiCo products could still be found in the Carrefour at number 269 in Alcalá de Madrid this Friday, a day after the supermarket chain informed its customers that it would stop selling PepsiCo products due to the high price. American multinational with brands as popular as Doritos, Cheetos, Lay's and Pepsi. “If you look closely, most potato bag brands have less product in them every day,” points out one shopper. A few lines further, the couple Juan Mengoya, 71, and María del Carmen Germán, 64, do not agree with Carrefour's measure. While he defends her because he understands that the French company wants to promote its own brands, she warns: “If customers don't find PepsiCo products here, they will look for them in other stores.”
PepsiCo brands can be found in almost every store, from large hypermarket chains to corner stores. But soon they will no longer be available for purchase at Carrefour. The decision, which is gradually becoming known in supermarkets in France, Spain, Italy and Belgium as stocks run out, is causing controversy: on the one hand, because it is unusual for one company to publicly oppose another company for commercial reasons vetoed, and on the other hand, because it comes after two years of unprecedented increases in food prices. PepsiCo continues to believe an agreement can be reached. “We have been negotiating with Carrefour for many months and will continue the dialogue in good faith to ensure the availability of our products,” he explained in a short statement this Friday.
It's not the first time that a company has stopped buying from a particular manufacturer, but it's not common for it to announce the decision with posters on the shelves accusing the supplier with a fairly direct message: “We will not sell this brand “for the unacceptable price increase,” read the posters that Carrefour began putting up in France on Thursday. The measure, which social networks and some media describe as a clear boycott of the manufacturer, covers Spain, Italy and Belgium, although the chain does not specify whether customers in these countries will also be informed with posters. Other brands affected include Alvalle-Gazpachos, which are very popular in Spanish supermarkets.
PepsiCo said in October that it was preparing a “modest price increase” in 2023 after the increase in 2022, and raised its profit forecasts for the third time this year. In general, the major manufacturers have slowed down growth in recent months: they are continuing to rise, but more slowly. Meanwhile, major European wholesalers insist their margins have fallen significantly because they have not passed on all price increases from their suppliers to shelves.
Carrefour's veto against PepsiCo was defended by Michel-Edouard Leclerc, president of E. Leclerc, the largest chain in France by market share (followed by Carrefour), although he did not clarify whether his company will and will follow its rival's example Stop purchasing PepsiCo products. “In the coming months, we need to convince all of these big suppliers who made the mistake of raising their prices too much to lower or moderate them now,” he said on LinkedIn.
Tense negotiations
Food prices have skyrocketed in the last two years and price negotiations between major manufacturers and retailers are becoming increasingly tense. France is an unusual case in Europe. The law is quite interventionist in relation to negotiations between suppliers and distributors of food and beverages and contains a lot of specific information on deadlines and margins. The government has also put a lot of pressure on the sector to adjust prices. This year, the annual negotiations were brought forward to January, two months earlier than planned, to try to get the moderation of price increases to the shelves as quickly as possible. Food prices that began to slowly fall last fall. Finance Minister Bruno Le Maire has threatened to impose special taxes on food companies that do not pass on price cuts to consumers.
In most EU countries, including Spain, discussions between manufacturers and sellers are also subject to legal conditions, but are more flexible (price increases are generally passed on earlier, but so are price reductions). In addition, the Spanish Food Chain Law stipulates that manufacturers, processors and retailers must pass on cost increases to prices, and the contract terms are based on this principle, which was introduced to protect the weakest links in the supply chain. Large groups, with greater bargaining power. If someone doesn't comply, it can be reported and the Department of Agriculture has the ability to impose fines.
The rise in prices in recent months has in the past led to clashes between traders and manufacturers across Europe. E. Leclerc announced in the summer that it would stop selling products from drinks maker Pernod Ricard due to pricing discrepancies, but some time later they returned to shelves. British chain Tesco had a similar conflict with Heinz in 2022 over the prices of beans and ketchup. In November, the Greek government fined subsidiaries of Procter & Gamble (with brands such as Ariel, Pantene and Fairy) and Unilever (Magnum, Hellmann's and Knorr (among others) one million euros each for violating the country's margin laws.
“Many foods are still sky high”
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The rise in food prices has eased in recent months, but they remain high. In addition, with the Christmas holidays and the start of the New Year, some products have increased again, both in the shopping cart and in leisure time, or at least that is the perception of many consumers. “We went to eat some churros and they already cost us 10 cents more on January 1st,” explain Juan Mengoya and María del Carmen Germán, customers of one of the Carrefour stores in Madrid. “Even toothpicks have gone up,” they complain.
Also walking the hallways of this two-story Carrefour is Fabiola Montoya, 50, who speaks out against Carrefour's decision to stop purchasing PepsiCoa products. “I think that you can choose through variety, both in price and quality.” Although not everyone thinks the same. Daniel Aldana, 26, believes the French supermarket's decision is right because he believes he has to look out for his own interests. He explains that he understands that the chain wants to maintain certain price standards because otherwise people would prefer to shop elsewhere. Aldana regrets that she had to reduce her purchase of fish and meat because her wallet does not allow it. “It’s a stroke of luck that I don’t buy salmon,” he admits.
“I usually come to this supermarket because they have the cheapest tuna, chickpeas and biscuits,” says another supermarket customer as she pulls her shopping cart. “Although for other things, like potatoes or olives, they are still sky high,” he says.
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