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Carrefour sticks price warnings on food to shame suppliers
Global Banking & Finance Review®
Company
By Dominique Vidalon
PARIS (Reuters) – French supermarket chain Carrefour has slapped price warnings on products from Lindt chocolates to Lipton Ice Tea to pressure top consumer goods suppliers Nestle, PepsiCo and Unilever to reduce inflation ahead of much-anticipated contract talks.
Carrefour is putting stickers on products that have shrunk in size but cost more even after raw materials prices have eased, to rally consumer support as retailers prepare to face the world’s biggest brands in negotiations due to start soon and end by Oct. 15.
“Obviously, the aim in stigmatising these products is to be able to tell manufacturers to rethink their pricing policy,” Stefen Bompais, director of client communications at Carrefour, said in an interview.
Carrefour CEO Alexandre Bompard, who also heads retail industry lobby group FDC, has repeatedly said consumer goods companies are not cooperating in efforts to cut the price of thousands of staples despite a fall in the cost of raw materials.
In this he is being backed by Finance Minister Bruno Le Maire, who in June summoned 75 big retailers and consumer groups to his ministry urging them to cut prices. After a new round of meetings last month, Le Maire said Unilever, Nestle and PepsiCo were among companies not toeing the line on prices.
Since Monday, Carrefour has marked 26 products in its stores in France with labels reading, “This product has seen its volume or weight fall and the effective price by the supplier rise.”
For example, Carrefour said a bottle of sugar-free peach-flavoured Lipton Ice Tea, produced by PepsiCo, shrank to 1.25 litres (0.33 gallon) from 1.5 litres, resulting in a 40% effective increase in the price per litre.
Guigoz infant formula produced by Nestle went from 900 grams (31.75 oz) to 830 grams, while a Viennetta ice-cream cake, produced by Unilever, shrank to 320 grams from 350 grams previously.
Lindt and PepsiCo did not respond to a request for comment. Nestle and Unilever declined to comment.
Consumer groups say “shrinkflation” is a widespread practice, which supermarkets like Carrefour are also guilty of in their private label products.
France, like other European countries, has been trying for months to ease consumer pain in the face of a surge in the cost of living, strong-arming big business to freeze or cut food and transport prices – with mixed results so far.
But Carrefour’s move to name and shame suppliers marks an escalation in the war of words between retailers and big multinationals.
The shrinkflation warnings are in all French Carrefour stores, and will last until the targeted suppliers agree to price cuts, Bompais said. The retailer could extend the warnings to other goods, but does not plan to extend the initiative to other countries.
Le Maire said last month consumer goods companies and retailers had agreed to bring forward annual price negotiations – which would normally have taken place next year – to September. The talks will result in price cuts from January, he said.
(Reporting by Dominique Vidalon in Paris, Richa Naidu in London; Writing by Helen Reid; Editing by Silvia Aloisi and Richard Chang)
Shrinkflation refers to the practice of reducing the size or quantity of a product while maintaining the same price, effectively increasing the price per unit.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Price warnings are notifications placed on products to inform consumers about price increases or changes in product size or quantity.
Consumer perception is how individuals view and interpret a brand, product, or service, which can influence their purchasing decisions.
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