European Grocers Halt Orders Over Inflation-Driven Price Hikes

Summary

  • Due to inflations, grocery retailers in countries like Germany and Belgium have halted some product orders over past year escalating tactics in negotiations.
  • Michel-Edouard Leclerc emphasized on LinkedIn the necessity to persuade major suppliers who have unjustifiably hiked their prices to reduce them or maintain them at a reasonable level.
  • Amid the conflict over inflated staple goods prices in France, a demand has risen for the conclusion of their annual price negotiations by January escalating pressure to curb inflation.
  • As a response to intolerable price surges, Carrefour decided to remove certain products such as Pepsi, Lay’s Crisps, Cheetos, and 7up from their stores in Belgium, France, Italy and Spain.
  • PepsiCo confirms to continue the dialogue with Carrefour to ensure the availability of its products despite brewing disagreements.
  • In 2022, approximately 1% of PepsiCo’s revenues were contributed by France.
  • E. Leclerc refrained from commenting on whether other products will face a similar fate as PepsiCo’s line.

Inflation and Negotiation Tactics

With increasing pressures of inflation, several grocery retailers across countries including Germany and Belgium have ceased the orders of certain products in the past year, making negotiations more aggressive.

Michel-Edouard Leclerc, in a LinkedIn post, emphasized the need to convince major suppliers, who have heavily inflated their prices, to either lower them or keep them moderate over the forthcoming month.

Price Disputes and Government Intervention

France is currently embroiled in a dispute over the price of staple goods. There is a strong claim from retailers stating that producer’s price hikes are unvalidated, leading the government to call for early conclusion of the annual price negotiations, aiming at reducing inflation.

Product Stocks and Prices

Carrefour made a bold move on Thursday announcing it would no longer be selling certain products such as Pepsi, Lay’s Crisps, Cheetos, and 7up in its stores across Belgium, France, Italy and Spain. This step was taken in response to what it called “untenable price escalations”.

In its defence, PepsiCo stated that it has been in talks with Carrefour for several months and will continue to do so in order to ensure product availability.

Revenue and Company Response

According to a study by Barclays analysing Nielsen figures, approximately 1% of PepsiCo’s 2022 revenue was generated from France.

E. Leclerc refrained from responding immediately to queries regarding possible withdrawal of PepsiCo or any other products as yet.

As a concluding note, these price disputes, government interventions and radical decisions by companies could heavily influence the forex market. For instance, if the Euro is impacted negatively, assets such as ETFs or European stocks could see significant movement.

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