If one of Europe’s largest grocery chains is removing certain soft drinks and snack foods in response to “unacceptable price increases” by U.S. food companies, can American grocers do the same?
European grocery chain Carrefour pulled Frito Lay chips, Quaker Oats products, Doritos snacks, and Pepsi and 7UP soft drinks from store shelves in France, Italy, Spain, and Belgium last Thursday following repeated price hikes, Reuters reported. Carrefour operates more than 12,000 stores worldwide but has not had a store in the United States since 2012.
According to the company, customer warnings were posted on shelves in September 2023 advising that the costs of certain products were “unacceptable.” Now, the supermarket giant has begun removing products to combat “shrinkflation.” The unusual move is being lauded by some customers who have seen significant price increases and reduced product volume recently.
“It doesn’t surprise me at all,” shopper Edith Carpentier told Reuters. “I think there will be lots of products left on the shelves because they have become too expensive, and they are all things we can avoid buying.”
“The French supermarkets, we know, are very, very ready to de-list people if they don’t like the deals that they get,” said James Walton, chief economist at the Institute of Grocery Distribution. “Obviously, that’s a last resort, because nobody wins if the goods that people want are not available on the shelves.”
While European grocers may choose to drop a product or brand as a “bold” negotiation strategy, American grocers do not have that same luxury, according to Randall Sargent, a partner with consulting firm OliverWyman.
U.S. retails are more hesitant to pull brands “because Americans aren’t likely to switch a soda,” she said, per The Dallas Morning News.
Sargent said European grocers also have “higher private brand penetration” and face “less disruption from missing items” than their American counterparts.
“Retailers can play hardball,” Sargent told DMN. “They may say, ‘We’re carrying your product, but we’re not going to promote it much’ or ‘It won’t be featured in the grocery ads or on endcaps.’”
“Space can be limited and given to another brand. Stores can also play with pricing in the category,” Sargent explained.
If a product is removed from store shelves in the United States, Sargent said consumers will make “tradeoffs” or “switch brands.”
“It’s in the interest of product makers to innovate and grow with new flavors and package sizes,” she said.
PepsiCo said in a statement that it has been in ongoing discussions with Carrefour for “many months” and that the company “will continue to engage in good faith in order to try to ensure that our products are available,” per the DMN.
Food inflation may have eased from its peak, but “the grocery industry is not looking at deflation in 2024,” according to Gary Huddleston, a grocery industry consultant to the Texas Retailers Association.
“Yes, a few categories have seen some reduction in costs like dairy. However, continued high diesel costs, wages that must keep up with inflation, higher insurance rates, increased packaging costs, etc. will continue into 2024. We will be fortunate if we can just remain flat,” he said, per the DMN.
