Carrefour says it will not sell PepsiCo goods due to price hikes

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PARIS (Reuters) -Carrefour is telling customers it will no longer sell PepsiCo (NASDAQ:PEP) products like Pepsi, Lay’s crisps and 7up because they had become too costly, in the latest tug-of-war over prices between retailers and global food giants.

From Thursday, shelves with PepsiCo products at Carrefour (EPA:CARR) stores in France will be accompanied by a note saying: “We are no longer selling this brand due to unacceptable price increases,” a spokesperson for the French retailer said.

The signs were already visible on the shelves of a Carrefour supermarket in Paris’ posh 16th district, where customers broadly cheered the move.

“It doesn’t surprise me at all,” shopper Edith Carpentier told Reuters. “I think there will be lots of products left on the shelves because they have become too expensive and they are all things we can avoid buying.”

PepsiCo did not respond to a request for comment.

The U.S. company said in October it planned “modest” price increases this year as demand held up despite rises, leading it to hike its 2023 profit forecast for a third straight time.

Over the past year, grocery retailers in several countries including Germany and Belgium announced they stopped orders from consumer goods firms due to price rises, a tactic in price negotiations that have become more fraught due to inflation.

It is unclear whether PepsiCo products already on Carrefour shelves will be withdrawn, the spokesperson said, adding it cannot stop shoppers from buying those on display.

Carrefour stores in Belgium were also putting up the signs, Belgian media reported. The company did not immediately confirm.

It has been one of the most active retailers to challenge big consumer products and food companies over prices.

Last year, it started a “shrinkflation” campaign of sticking warnings on products that have shrunk in size but cost more. The spokesperson could not immediately confirm on Thursday if this was still the case.

In its efforts to lower inflation, the French government has asked retailers and suppliers to wrap up annual price negotiations in January, two months sooner than usual.

France is unusual in Europe in that it strongly regulates the retail sector, forcing supermarkets to negotiate prices only once a year with food and drink producers, in an attempt to protect its farm industry.

“The French supermarkets, we know, are very, very ready to delist people if they don’t like the deals that they get,” said James Walton, chief economist at the Institute of Grocery Distribution.

“Obviously that’s a last resort, because nobody wins if the goods that people want are not available on the shelves.”