PepsiCo products are being pulled from some Carrefour grocery stores in Europe over price hikes

PARIS (AP) — Global supermarket chain Carrefour will stop selling PepsiCo products in its stores in France, Belgium, Spain and Italy over price increases for popular items like Lay's potato chips, Quaker Oats, Lipton tea and its namesake soda.

The French grocery chain said it pulled PepsiCo products from shelves in France on Thursday and added small signs in stores that say, “We no longer sell this brand due to unacceptable price increases.”

It comes as a new French law meant to fight the rising cost of living has supermarkets facing millions in fines if they don't reach a deal with suppliers on prices by the end of the month.

The ban also will extend to Belgium, Spain and Italy, but Carrefour, which has 12,225 stores in more than 30 countries, didn't say when it would take effect in those countries.

PepsiCo products were still on shelves Friday in Rome and Barcelona. Carrefour Italia’s press office said information will be posted for customers in their stores in Italy in the next days.

PepsiCo said in a statement that it has “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.”

The company behind Cheetos, Mountain Dew and Rice-A-Roni has raised prices by double-digit percentages for seven straight quarters, most recently hiking by 11% in the July-to-September period.

Its profits are up, though higher prices have dragged down sales as people trade down to cheaper brands. PepsiCo also has said it's been shrinking package sizes to meet consumer demand for convenience and portion control.

“I do think that we see the consumer right now being more selective,” PepsiCo Chief Financial Officer Hugh Johnston told investors in October.

The Purchase, New York-based company said price increases should ease and largely align with inflation, which has fallen considerably worldwide since crunched supply chains during the COVID-19 pandemic and then Russia's war in Ukraine sent prices surging.

However, the 20 European Union countries that use the euro currency saw consumer prices rise to 2.9% in December from a year earlier, rebounding after seven straight monthly declines, according to numbers released Friday.

Prices for food and non-alcoholic drinks have eased from a painful 17.5% in the 20-country euro area in March but were still up by 6.9% in November from a year earlier.

The government of French President Emmanuel Macron has fought back on the rising cost of living for households, passing a November law to implement “emergency measures” to fight high prices.

The law moved up annual negotiations between supermarkets and their suppliers on setting prices and more to Jan. 31 from March 1. Fines have been increased to 5 million euros ($5.5 million) for grocery companies that fail to meet the new deadline for setting prices.

Burt Flickinger III, managing director of grocery consultancy Strategic Resource Group, said he thinks PepsiCo was targeted because the company has been one of the most aggressive in raising prices. He thinks other big brand names could be next and that other European retailers could follow Carrefour's lead.

Pulling products off shelves over prices is rare, but it happens. Flickinger noted that Kraft Heinz stopped supplying British retailer Tesco with some of its items in 2022 for a week over a pricing spat.

Rob Dongoski, agribusiness and food lead in the consumer practice of management consultancy Kearney, said the showdown between the two big brands represents the ultimate test of customer loyalty.

“Are you loyal to your store or loyal to your brand?” he said.

In the U.S., several grocery sellers including Walmart have expressed displeasure at consumer product companies' moves to keep pushing up prices even as overall inflation has come down. Particular problem areas had been packaged foods and household goods.

Walmart's CEO Doug McMillon said in May that, “We all need those prices to come down."

Stew Leonard Jr., president and CEO of Stew Leonard’s, a supermarket chain with stores in Connecticut, New York and New Jersey, told said in July that he warned the big consumer product companies that he wouldn’t accept any more price increases because he believed customers had reached a tipping point. But he noted on Friday that price increases have eased for many items, except for meat.

“It's hard to justify price increase when overall costs are coming down,” Leonard said.

For its part, PepsiCo has pointed to higher costs for grain and cooking oil for its rising prices. Costs for those food commodities surged following Russia’s invasion in Ukraine but fell considerably on global markets last year from record highs in 2022.

The U.N. Food and Agriculture Organization said Friday that its food price index was 13.7% lower in 2023 than the year before, but its measures of sugar and rice prices grew in that time. That overall relief still is not being felt by families at supermarkets.

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Durbin reported from Detroit. Associated Press reporter Frances D’Emilio in Rome and AP Retail Writer Anne D'Innocenzio in New York contributed to this report.