Carrefour sticks price warnings on food to shame suppliers

3/3 © Reuters. A sign reading "Shrinkflation, This product has seen its liter decrease and the price charged by our supplier increase" as a customer shops at a Carrefour supermarket in Montesson near Paris, France, September 13, 2023. REUTERS/Sarah Meyssonnier 2/3

By Dominique Vidalon

PARIS (Reuters) - French supermarket chain Carrefour (EPA:CARR) has slapped price warnings on products from Lindt chocolates to Lipton Ice Tea to pressure top consumer goods suppliers Nestle, PepsiCo (NASDAQ:PEP) and Unilever (LON:ULVR) 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 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 Unilever's Viennetta ice-cream cake shrank to 320 grams from 350 grams.

Lindt's "chocolat au lait extra fin" was one of three of the Swiss chocolatier's products named in the list.

"Lindt & Sprüngli increased its prices group wide on average by 9.3% in line with local cost structures," a company spokesperson told Reuters. "We have made a concerted effort to compensate for increased costs by increasing efficiency as much as possible. Therefore, we have only passed on the costs we could not absorb ourselves in the form of price increases to our customers."

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.

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 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.