Carrefour-PepsiCo Spat Comes as Grocers Step Up Efforts to Manage Inflation

As rising food prices alienate grocery customers, merchants are beginning to throw their weight around with major food brands, if the Carrefour-PepsiCo standoff is any indication, though the truth may be murkier.

Last week, Reuters reported that the French grocery giant informed shoppers that it would no longer carry food and beverage giant PepsiCo’s products, in response to “unacceptable price increases,” per a spokesperson for the grocer.

Yet PepsiCo tells a different story, according to a Wall Street Journal article Tuesday (Jan. 9).

“Regrettably, Carrefour has mischaracterized the chain of events,” a PepsiCo spokesperson told the news outlet. “Given the lack of agreement on a new contract, we stopped supplying to Carrefour at the end of the year, something they were aware could happen.”

Carrefour, in turn, told the outlet, “We, at the Carrefour Group, have taken this decision.”

Either way, it seems that an agreement could not be reached, and just as Carrefour will lose the company’s popular products, the food and beverage firm is losing access to the major grocer’s wide customer base.

Notably, consumers tend to be more loyal to brands than they are to retailers, but this trend may not hold when it comes to snacks and soft drinks specifically. PYMNTS Intelligence’s study last spring, “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” which drew from a survey of more than 2,000 U.S. consumers, found that 47% of grocery shoppers had switched to buying from merchants with lower prices for at least one grocery product.

However, only 32% had done so for snacks and 29% did so for nonalcoholic beverages. Similarly, the study noted, 1 in 3 grocery shoppers had downgraded from their favorite brands to lower-priced alternatives such as private-label products to save money. As such, if French grocery shoppers are anything like their American counterparts, in the falling out between Carrefour and PepsiCo, each industry giant may be similarly affected.

This tiff is not the first time that a grocer has tried to exercise pressure on suppliers in this period of food inflation. Last year, it was reported that Whole Foods Market had asked suppliers in a virtual meeting to lower their wholesale prices so that the chain could reduce prices for consumers.

Even as grocery inflation has slowed, consumers have continued to strain under the years of inflation and consequently to continue their belt-tightening behaviors. A PYMNTS Intelligence survey from September revealed that grocery shoppers’ estimates of the impact of the last year of inflation are actually far closer to the measured changes seen since 2019.

And economic pressures persist. Another PYMNTS Intelligence study, “New Reality Check: The Paycheck-to-Paycheck Report — The Savings Deep Dive Edition,” created in collaboration with LendingClub, which draws from a census-balanced survey of more than 3,600 U.S. consumers, found that nearly eight out of 10 consumers have depleted their savings to pay their bills.

As such, as food brands continue to raise their prices, merchants see the risk of further alienating shoppers already straining under years of grocery inflation. It remains to be seen, as these trends continue, if more grocers will take a hard line.