Pepsico Reportedly Initiated Grocery Breakup Over Price Hike Dispute, Not Carrefour: 'Mischaracterized The Chain Of Events'

PepsiCo Inc PEP stated on Monday that it was the one to initiate the split with French supermarket giant Carrefour CRRFY, not the other way around.

What Happened: The Wall Street Journal reported that PepsiCo announced its decision to stop supplying Carrefour’s European stores due to an impasse in negotiations for a new contract. This move was made public on Monday, further escalating the rift over price increases.

Carrefour had previously declared it would cease selling PepsiCo products in France, Italy, Spain, and Belgium, citing unacceptable price hikes. According to Bernstein analyst Callum Elliott, PepsiCo’s decision to stop supplying Carrefour in these countries accounts for approximately 0.25% of its global revenue.

A PepsiCo spokesman countered Carrefour’s stance on the matter, stating, “Regrettably, Carrefour has mischaracterized the chain of events.”

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The spokesman added, “We hope we can agree on terms soon so our products can be back on their shelves for consumers to enjoy.”

Carrefour responded on Monday, stating, “We, at the Carrefour Group, have taken this decision.”

Why It Matters: The dispute between PepsiCo and Carrefour is rooted in their negotiations for new pricing agreements, which have been ongoing for several months. The French government has been urging suppliers to reach agreements with retailers for lower prices, given France’s double-digit food price inflation in 2022, which reached nearly 16% in March 2023.

In August, French finance minister Bruno Le Maire accused Unilever, Nestlé, and PepsiCo of not cooperating with a government-led agreement to freeze or reduce prices on thousands of products. The government subsequently announced plans to force food producers to start annual price negotiations with grocers months earlier than usual, intending to implement price cuts in January.

Carrefour has been publicly pressuring suppliers to lower prices since last summer, with CEO Alexandre Bompard attributing soaring prices to supplier refusals to renegotiate prices despite falling inflation and government pressure.

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Image: Shutterstock by Zety Akhzar