In the Carrefour at number 269 in Alcalá de Madrid you could still find PepsiCo products this Friday, a day after the supermarket chain announced to its customers that, due to its high price, it is going to stop selling PepsiCo products. American multinational with brands as popular as Doritos, Cheetos, Lay's and Pepsi. “If you look closely, most brands of potato bags carry less product inside every day,” highlights one buyer. A few lines away, the couple formed by Juan Mengoya, 71, and María del Carmen Germán, 64, do not agree on Carrefour's measure. While he defends her because he understands that the French company wants to promote its own brands, she warns that if “customers do not find PepsiCo products here, they will look for them in other stores.”
PepsiCo brands can be found in almost any store, from large hypermarket chains to the corner store. But soon they will not be able to be bought at Carrefour. The decision, which will gradually be noticed in supermarkets in France, Spain, Italy and Belgium as stocks run out, is causing controversy: on the one hand, because it is unusual for a company to publicly veto another for reasons commercial and, on the other hand, because it occurs after two years of unprecedented increases in food prices. PepsiCo still believes a deal can be reached. “We have been negotiating with Carrefour for many months and we will continue to dialogue in good faith to try to guarantee the availability of our products,” he stated this Friday in a brief statement.
It is not the first time that a company stops buying from a certain manufacturer, but it is not common for it to announce the decision with posters on the shelves blaming the supplier with a fairly direct message: “We are not going to sell this brand anymore for the unacceptable increase in prices,” reads the posters that Carrefour began to put up in France on Thursday. The measure, which social networks and some media describe as a clear boycott of the manufacturer, includes Spain, Italy and Belgium, but the chain has not given details about whether customers in these countries will also be informed with posters. Other brands affected are Alvalle gazpachos, for example, very popular in Spanish supermarkets.
PepsiCo announced in October that it was preparing a “modest increase” in prices in 2023, following the increase in 2022, and raised its profit forecasts for the third time in the year. In general, large manufacturers have put the brakes on increases in recent months: although they continue to rise, they do so at a slower pace. Meanwhile, the main European distributors insist that their margins have been significantly reduced by not transferring all price increases from their suppliers to the shelves.
Carrefour's veto of PepsiCo has been defended by Michel-Edouard Leclerc, president of E. Leclerc, the largest chain in France by market share (followed by Carrefour), although he has not clarified whether his company is going to follow the example of his rival and will stop buying PepsiCo products. “In the coming months we must convince all these large suppliers who have made the mistake of increasing their prices too much to lower them now or moderate them,” he said on LinkedIn.
Tense negotiations
The price of food has skyrocketed in the last two years and negotiations between large manufacturers and distributors over price are increasingly tense. France is an unusual case in Europe. The law is quite interventionist regarding negotiations between suppliers and distributors of food and beverages, and includes many specific data on deadlines and margins. The Government has also put a lot of pressure on the sector to adjust prices and this year the annual negotiations have been brought forward to January, two months ahead of schedule, in an attempt to transfer the moderation in price increases to the shelves as soon as possible. food prices, which began to decline slowly last fall. The Minister of Finance, Bruno Le Maire, has threatened to impose special taxes on food companies that do not pass on price drops to consumers.
In most EU countries, including Spain, conversations between manufacturers and sellers are also subject to legal conditions, but are more flexible (in principle, price increases are passed on earlier, but so are price decreases). In addition, the Spanish Food Chain Law establishes that producers, processors and distributors must pass on cost increases to prices and the conditions of the contracts are based on this principle that was included to protect the weakest links in the supply chain. large groups, with greater negotiating power. If someone does not comply, it can be reported and the Ministry of Agriculture has the capacity to impose fines.
The price escalation of recent months has resulted in previous clashes between distributors and manufacturers throughout Europe. E. Leclerc announced in the summer that it would stop selling products from the beverage producer Pernod Ricard due to price disagreements, although some time later they returned to its shelves. The British chain Tesco had a similar clash with Heinz over the price of beans and ketchup in 2022. 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) with one million euros each for violating the country's margin laws.
“Many foods are still sky high”
LEV
The rise in food prices has been subsiding in recent months, but they remain high. Furthermore, with the Christmas holidays and the beginning of the new year, some products have risen again, both in the shopping basket and in leisure, or that is the perception that many consumers have. “We went to eat some churros and they already cost us 10 cents more on January 1,” explain Juan Mengoya and María del Carmen Germán, customers of one of the Carrefour stores in Madrid. “Even toothpicks have gone up,” they lament.
Also walking through the hallways of this two-story Carrefour is Fabiola Montoya, 50, who opposes Carrefour's decision to stop buying PepsiCoa products. “I think that by having variety one can choose, both in price and quality.” Although not everyone thinks the same. Daniel Aldana, 26 years old, considers that the decision of the French supermarket is correct because he believes that he has to look at his own interests. He explains that he understands that the chain wants to maintain certain standards in prices because otherwise people will prefer other places to make purchases. Aldana regrets that he has had to reduce his purchase of fish and meat because his pocketbook does not allow it. “It's a godsend that I don't buy salmon,” he admits.
“I usually come to this supermarket because it has the cheapest tuna, chickpeas and cookies,” says another supermarket customer, while pulling her cart. “Although in other things, like potatoes or olives, they are still sky high,” she says.
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