French supermarket giant Carrefour was lauded for its gusty move last week when it seemingly removed PepsiCo products from stores, in a battle to fight 'shrinkflation'. But PepsiCo has now disputed this version events, saying the disappearing products are actually a result of contract negotiations.
Carrefour previously said it was pulling products like Doritos, Cheetos and 7up from its shelves in France, Italy, Spain, and Belgium, following tussles over 'shrinkflation.' This occurs when suppliers reduce the sizes and contents of their items without reducing prices.
The group’s move, described as a “show of strength” by the chairman of Carrefour’s biggest rival E.Leclerc, appeared to be an escalation in tensions in what has become a politically charged issue during a cost of living crisis.
However, according to a statement shared with the Wall Street Journal, PepsiCo has now claimed that the removal of products wasn’t Carrefour’s decision at all—but rather its own.
A representative for PepsiCo told the WSJ that Carrefour had “regrettably mischaracterized the chain of events” when the supermarket claimed it had banned the supplier's products in some of its stores.
“Given the lack of agreement on a new contract, we stopped supplying to Carrefour at the end of the year, something they were aware could happen. We hope we can agree on terms soon so our products can be back on their shelves for consumers to enjoy,” the spokesperson said.
A representative for Carrefour in turn responded to the WSJ, countering PepsiCo’s claims.
“We, at the Carrefour Group, have taken this decision,” the spokesperson said.
Representatives for PepsiCo and Carrefour didn’t immediately respond to Fortune’s request for comment.
In a statement provided to Fortune before the publication of the WSJ’s report, a representative for PepsiCo said: “We’ve been in discussion with Carrefour for many months, and we will continue to engage in good faith in order to try to ensure that our products are available.”
War between suppliers and retailers intensifies
The counter-statements between two major companies—which made a combined $176 billion in revenues in the last financial year—are highly unusual, indicating how tense negotiations appear to have become between European retailers and major global suppliers.
Arguments around inflation have been reframed in recent months as the consumer price index falls back towards Central Bank targets of 2%, and consumers plagued by months of high prices become more sensitive to further price increases.
Analysts are also questioning the narrative that inflation was driven by rising costs linked to supply chain crunches in the wake of the COVID-19 pandemic and Russia’s invasion of Ukraine.
Instead, opportunistic profiteering has been blamed for a significant share of price increases, known as “greedflation,” according to a joint study by Common Wealth and the IPPR.
That has caught the eye of the French government, which pressured food suppliers in the country to lower their prices last summer—even threatening financial sanctions for companies that didn’t bring down prices in the face of falling raw material costs.
In that context, Carrefour had appeared emboldened to push PepsiCo to buckle under a growing PR storm by taking the bold move to remove products from its shelves.
It followed a previous move by the supermarket to publicly shame PepsiCo and other brands, including Unilever, by attaching labels to products it said had increased in price despite shrinking in quantity.
Out on its own
However, in the days since Carrefour claimed it had removed the items from its shelves, it has struggled to convince other major retailers to follow suit.
Speaking to French news channel BFMTV Monday, E.Leclerc chairman Michel-Edouard Leclerc said his company wouldn’t be removing PepsiCo products from its shelves, preferring instead to engage in discussions with the soft drink giant.
Leclerc had previously appeared to back Carrefour’s stance in a LinkedIn post Friday, as corporations come to blows over who should absorb rising costs as customers increasingly become impatient with years of price increases.
PepsiCo has a blueprint to turn to for its current fraught stand-off with a major retailer.
In January 2022, PepsiCo halted shipments of its Frito-Lays potato chips to Canadian grocer Loblaw after the retailer refused a price increase of less than 10%.
Loblaw's announced in April of that year that the snack would be returning to its aisles after the pair eventually struck a deal, the Financial Post reported.
