French retail cooperative Système U has removed some PepsiCo products from its aisles amid a row over “unjustified” price increases, CEO Dominique Schelcher said.
The US food and beverage giant demanded a price rise of “over 20%”, Schelcher told French broadcaster BFM TV during a television interview yesterday (30 March).
But Système U felt the 7Up brand owner’s explanation for the scale of price rises was unsatisfactory and did not match its own pricing analysis.
He said as raw-material prices have begun to fall, the question the cooperative is getting most from consumers is: “When are you going to lower the prices on the shelves?”
After failing to reach an agreement over the increases, the two companies compromised by allowing rises on a small number of products and taking the drinks giant’s remaining range off the shelves, Schelcher said.
Schelcher confirmed “some products” are still available in Système U but did not specify which lines.
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Just Drinks has contacted PepsiCo about the alleged dispute.
Discussing wider cost pressures and consumer shopping habits, Schelcher said people are shopping more frequently and are searching “extensively” for promotional offers. He said the supermarket has “never had so many promotions”.
While it is too early to comment on the chain’s sales of confectionery over the Easter period, he said he expects chocolate sales will still be healthy as it is seen as a “comfort” product.
He also noted a trend towards private-label foods and away from big brands. Since the beginning of the year the volume of “major” brands sold in the supermarket has dropped by 5%, and the supermarket’s private-label brand U has seen “considerable” success.
Although he hopes food prices will stabilise by the summer, Schelcher said he does not see inflation returning to normal any time soon. “To be honest and transparent, with the high prices of electricity and gas, we will not return to pre-war prices,” he said.
It follows an agreement reached between the French government and food retailers earlier this month to set the “lowest possible price” on a range of products. The so-called anti-inflation quarter will last until June, and France’s Economy Minister, Bruno Le Maire, said the pact will represent “several hundred” millions of euros, which will come out of retailers’ margins.
Speaking to CNBC at the World Economic Forum in Davos in January, PepsiCo Ramon Laguarta said consumers remained “resilient” amid cost inflation. He added: “We feel good about our categories. We have a lot of knowledge [about] how to make our brands affordable in difficult times.”