To solve the matter, France’s top food retail seller boldly announced on Thursday that it will no longer offer PepsiCo products due to pricing that were judged to be ‘unacceptable’ by customers. This action has caused shame and increased the way French retail vendors exhibit certain brands. lowering costs as a result of less currency depreciation.
Global retail behemoth Carrefour put up signs in 3,440 of its stores throughout France on Thursday. These stores often display goods from PepsiCo, including Doritos, Quaker cereals, Lay’s potato chips, and 7-Up cold drinks. The banners said, “Due to unacceptable price hikes, we are no longer selling this brand.”
As per a PepsiCo representative, the business “has been in discussions with Carrefour for several months, and we will continue to work with confidence to ensure our products remain available.”
Factors causing Inflation.
Increase in Interest Rates.
November’s expected reduction in inflation in the Eurozone to levels below those seen two years ago was caused by the European Central Bank’s strong push to raise interest rates and the European countries’ attempts to lower energy and food prices. In December, France’s inflation rate rose by 3.7%, or 25% less than a year earlier.
But the inflation of food prices has been persistently high. A particular basket of staple foods, such as pasta and yogurt, is still more than 7% more expensive in France than it was a year ago.
Lower Profit margins.
Certain manufacturers have defended these expenses by claiming that, particularly for food items, the typical profit margin in Europe is lower than input costs. “Despite historically high levels of price inflation, the limit of price increases is still not sufficient to cover the costs of inflation that we have experienced,” Unilever’s Chief Financial Officer, Graeme Pitkethly, told analysts in October.
Supermarkets under Pressure.
Grocery sales statistics show that France is the largest market for supermarket sales in Europe. As such, manufacturers and retail vendors have been under pressure to reduce prices for more than a year. Following more than a year of record-high prices, largely due to Russia’s invasion of Ukraine, President Emmanuel Macron has declared that he wants to see at least a 5% decrease in food costs to reflect an overall decrease in the cost of raw commodities.
Currency depreciation labeling
In an effort to provide customers with prompt respite, he insisted in November that the two-month deadline for yearly pricing talks between French retail vendors and manufacturers be extended until the end of January. Additionally, France has submitted a proposal to the European Union that would force food retailers to start a campaign for currency depreciation labeling.
Impacts of Russia’s war in Ukraine
Signs indicating the rate of depreciation and the amount of price pressure on customers have already begun to appear on Carrefour’s shelves. This action by France is part of a larger European effort to address the ongoing crisis caused by rising living expenses, even in the face of economic recession. Europe is moving forward on a radically different route from the United States, where the long-term impacts of Russia’s war in Ukraine and rising interest rates are causing an energy crisis.
The Italian government has made an effort to put pressure on food manufacturers and retailers to lower their costs. Supermarkets are now being forced by the Greek government to disclose the costs of staple foods. Several significant French grocery companies have hinted that they might do the same. In an interview on French radio on Tuesday, Michel-Édouard Leclerc, the president of the large food retail vendor Leclerc, stated, “This is not over.” He said that a lot of food manufacturers are still asking for price increases of six to eight percent.”