Carrefour’s Shrinkflation Campaign: PepsiCo is Next

Reading Time: 2 minutes
As PepsiCo products are pulled off shelves, Carrefour changes the way supermarkets sell items. (Image Credit: Commonwealth Journal)

Carrefour, a major supermarket chain located in Europe, will stop selling PepsiCo products in stores in Spain, Italy, Belgium, and France over major price increases for popular items, such as Quaker Oats, Lipton tea, Lay’s potato chips, etc.

Starting on Thursday, Shelves for PepsiCo products will begin carrying signs stating that such products will no longer be restocked, “due to unacceptable price increases”, explained by a spokesperson for Carrefour.

PepsiCo, the company behind products such as Cheetos and Mountain Dew, have been raising the prices by double-digit percentages for seven straight quarters, recently in an increase of 11% in the July to September period.

While this has led to an increase in profits, the high prices have resulted in lower sales due to people preferring cheaper stores. PepsiCo has stated that it’s been decreasing package sizes to accommodate the consumer demand for convenience and portion control. “I do think that we see the consumer right now being more selective,” said PepsiCo Chief Financial Officer Hugh Johnston to investors in October.

This ban would impact over 9,000 stores across the four countries, out of the 12,225 stores in more than 30 countries Carrefour has. PepsiCo has explained the situation by stating, “We’ve been in discussion with Carrefour for many months, and we will continue to engage in good faith in order to try to ensure that our products are available.”

This ban is part of Carrefour’s attempts of pressuring global consumer good companies to cut their prices following major energy, commodity, and labor costs in the prior two years. This has been a part of Carrefour’s “Shrinkflation” campaign, with Carrefour taking such actions as to slap warnings on products advising customers the products have shrunk in size, while still costing more despite raw material costs easing.

The prices of food commodities such as sugar or cereal, have been dropping over the past year, with the food price index for 2023, dropping roughly 14% down compared to the average level of the prior year. This drop in price of food commodities has led to Carrefour CEO Alexandre Bompard to state consumer good companies are not trying to lower the price of their products, despite the decrease in the cost of ingredients used in said products.

Written by Kevin Han

Share this:

You may also like...