Source: PepsiCo China official website.
PepsiCo, which has frequently raised prices, has recently been counterattacked by channel providers.
According to the Financial Associated Press, on January 4, local time, a spokesman for Carrefour's French supermarket said that Pepsi cola product shelves in Carrefour stores in France, Italy, Spain and Belgium will post slogans: indicating that due to the unacceptable magnitude, supermarkets will no longer purchase related brand products.
The move means that customers in these four European countries will no longer be able to buy PepsiCo products in Carrefour supermarkets, announcing that retail giant Carrefour and global food giant PepsiCo have entered a hot business war.
In four countries in Europe, "** Pepsi.
According to reports, starting from Thursday (4th), Pepsi product shelves in Carrefour stores in France, Italy, Spain and Belgium will have slogans on the shelves, saying that "due to *** unacceptable", the store will no longer stock these brand products. This involves eight PepsiCo brands, including Lay's'S), Doritos, Benenuts, Alvalle, Lipton, Pepsi, 7Up, and Quaker products.
In addition, Carrefour will also remove PepsiCo products from stores in Italy, Spain and Belgium. According to Carrefour's 2022 annual report, there are more than 9,000 stores in the four affected countries, accounting for about two-thirds of Carrefour's 14,348 stores worldwide.
The move marks an escalation of Carrefour's attempt to pressure some of the world's largest consumer goods companies to cut prices, which have also slashed their product cuts over the past two years in the face of soaring energy, commodities and labor**.
"We have been in discussions with Carrefour for several months, and we will continue to negotiate in good faith to ensure that our products are available to everyone," PepsiCo said in a statement. "On the 4th, in the Carrefour supermarket in the fashionable 16th arrondissement of Paris, customers could not find some Pepsi products such as "Cheetos" and 7-Up, but other products, including Pepsi, were still on the shelves, next to the above notice.
It is worth mentioning that in September last year, Carrefour launched a "shrinking inflation" campaign, posting warnings next to many products from Lindt chocolate to Lipton iced tea, informing customers that these products have shrunk in size, but ** are more expensive, although the raw materials ** have fallen.
Carrefour CEO Alexander Bombal has repeatedly stressed that consumer goods companies are reluctant to cooperate, and that despite the reduction in raw materials, they are still unwilling to reduce thousands of major products.
However, Ramón L. LaGuarda, the CEO of PepsiCo, said at the earnings conference last October that PepsiCo expects "inflation to be higher" and that its products will remain high this year.
Preliminary data released on January 4 showed that French inflation rose from 39% rose to 41%。According to the French National Statistics Office, food inflation has increased from 77% down to 71%。
Over the past two years, Nestle, Unilever, Coca-Cola and Procter & Gamble have all made significant increases in their products, passing on the cost to consumers.
This has sparked intense negotiations between retailers and consumer goods giants, with some brands temporarily removed from shelves due to lack of agreement.
After several failed negotiations in 2022, Kraft Heinz stopped supplying some of its products, including ketchup and baked beans, to Tesco, the UK's largest food retailer. At the time, Tesco said Kraft Heinz's price increase was "unreasonable". Later, when the products were back on the shelves, Heinz's most popular series of products was adjusted back to their original prices.
The increase in the number of products from each brand has prompted consumers to buy retailers' own brand products. Carrefour CEO Bampal said in February last year that the company would "substantially increase" its share of private label products over the next three years, bringing it to 40% of the products on sale.
Some analysts said that this practice of "chasing inflation with price increases" obviously put pressure on supermarket turnover, and also forced retailers to demand price reductions in a new round of ** negotiations. In addition to Carrefour, grocery retailers in several countries, such as Germany and Belgium, have also stopped placing additional orders with some consumer goods companies.
Carrefour is clearly one of the most negotiating companies in the retail industry and one of the most willing to challenge the strategies of consumer goods companies. Last year, it launched a campaign to shrink inflation, plastering warnings on small-sized items from brands such as PepsiCo to alert consumers.
However, from a business point of view, Carrefour's move is also quite risky. James Walton, chief economist at the magazine's Distribution Institute, told the magazine that supermarkets in France have always wanted to remove business they don't like from their purchase lists, but the problem is that if there is nothing on the shelves that customers want, supermarkets will not benefit, and neither will food brands.
PepsiCo has raised prices several times.
Last year, many global consumer goods companies raised their lives by double digits. They usually attribute *** to the cost of raw materials and labor.
At the same time, many of these companies have reported expanding profits due to fewer goods at a higher rate. In recent months, companies have reported that shoppers are under more pressure from inflation and high interest rates. Consumer goods sales companies, including PepsiCo, reported that they noticed customers tightening their wallets.
In fact, in recent years, PepsiCo has been launching price increase measures, and has repeatedly mentioned in its financial reports that the price increase has helped to increase performance. For example, in April 2022, the retail price of 500ml bottled Pepsi Original, Pepsi Sugar-free, Mirinda and other soda products were all raised by 0$5.
In October last year, PepsiCo said that demand was strong and maintained, planned to raise prices slightly, and raised its annual profit outlook for the third time. Prior to that, PepsiCo had raised its profile for seven consecutive quarters**.
According to the financial report data, PepsiCo's performance in the third quarter of 2023 exceeded expectations across the board, with quarterly revenue of 234US$5.3 billion, up 675%, slightly exceeding Wall Street's expectations of 233US$800 million, while the net profit attributable to the parent reached 30$9.2 billion, a year-on-year increase of 144%, resulting in earnings per share of 2.$25, an increase of 14 percent year-on-year8%, higher than the market expectation of 2$16. Similarly, organic revenue, which is a better indicator of the quality of growth (which excludes the impact of foreign exchange rates, acquisitions and divestitures), also recorded an 88% above expected growth.
However, looking back at PepsiCo's data from previous quarters, it should be pointed out that despite the overall performance in the third quarter, its organic revenue growth has shown an inflection point, and after seven consecutive quarters of double-digit growth, it has fallen back to a single-digit level in the third quarter.
On the surface, the decline in organic revenue growth is related to PepsiCo's repeated price increases since last year. The data shows that on the basis of the previous two rounds of price increases, Pepsi once again raised the overall ** by 11% in the third quarter of last year, and at the same time, Pepsi implemented a reduction strategy for some product lines. Although the strategy of price increase and volume reduction has strongly promoted the growth of overall performance, it has also triggered consumers to re-evaluate the value performance of their products, which in turn affects the level of organic income.
I do think we're seeing consumers become more picky now," Hugh Johnston, then PepsiCo's chief financial officer, told analysts at last October's earnings conference, "and you're going to see some value propositions." ”
Retailers, on the other hand, are eager to see a decline. Executives at Walmart, the largest retailer in the United States, welcomed the slowdown in groceries** ahead of the holiday season, but were concerned about the high level of food**.
Walmart CEO Doug Macmillan told analysts in November, "Some of the deflation we're seeing is helping, but we'd like to see more, faster, especially in the dry grocery and consumer goods categories." ”
France's move comes as Europe is gaining broader momentum to tackle the ongoing cost-of-living crisis despite the economic downturn. In Italy, an attempt has been made to pressure retailers and manufacturers to lower their food offerings. Greece** has started requiring supermarkets to report charges for basic foodstuffs**. Other large French supermarket chains have said they may follow suit.
In addition, in the Chinese market, PepsiCo Beverage also issued a price adjustment notice in December 2023, saying: "Based on the increase in raw materials and production costs year by year, it has caused greater pressure on our products. In view of the pressure on operating costs, our company has adjusted the supply prices of some Pepsi beverage products (including brands: PepsiCo, Pepsi Sugar-Free, Mirinida, 7-Up, Gatorade, and Fruit Fun). However, the specific adjustment range and adjustment time were not clearly stated by the company.
*: WeChat***Caizhi headlines" are integrated from: surging news, financial associated press, red star news, reference news, etc.
Editor-in-charge: Bai Jing.
Proofreading: Fenghua.
Review: Gong Zimo.