French supermarket chain Carrefour SA (FR:CA) is pulling out American food and beverage giant PepsiCo’s (NASDAQ:PEP) products from its shelves, citing “unacceptable price increases.” Carrefour’s decision will be implemented across its stores in France, Italy, Spain, and Belgium. The products affected include Lays, Doritos and Cheetos chips, Pepsi Soda, Quaker foods, Lipton teas, and 7 Up cold drinks.
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Carrefour is the second-largest grocery retailer chain in Europe. It operates stores in multiple formats, like convenience stores, supermarkets, hypermarkets, and cash & carry stores. Carrefour operates in more than 30 countries with approximately 12,000 stores. CA shares have gained 10.2% in the past year.
Carrefour’s Battle with Undue Price Hikes
Carrefour has started putting up signs informing customers that the products will no longer be available due to the unreasonable price hikes. The existing products will be sold until stocks last. The retailer has been vocal about its dislike of food companies’ price hike practices since last year. In September 2023, Carrefour also put up signs of “shrinkflation” on some of PepsiCo’s products. Shrinkflation refers to the practice of reducing the size of the food packets but not reducing the prices by the same scale.
PepsiCo has increased the prices of its products in the past year and boasted that it has not affected its sales since consumers are willing to buy its products despite the inflationary pressure. Last year, PepsiCo said that it expects to increase prices in 2024 but not as aggressively.
Importantly, France has been wrestling with sky-high inflation rates. In December, the country recorded a 7.1% growth in food prices, as per preliminary estimates. The government has also pushed for major food manufacturers to reduce prices or face special tax penalties for excessive profits. Further, the government has preponed the deadline for negotiations between food companies and retailers by nearly two months to mid-January to settle the issue.
What is the Stock Price Forecast for Carrefour?
On TipRanks, the Carrefour SA share price forecast of €20.19 implies 20.4% upside potential over the next twelve months. Recently, Jefferies analyst Frederick Wild reiterated a Buy rating on CA stock with a price target of €21 (25.2% upside).
Also, CA stock has a Moderate Buy consensus rating based on four Buys versus four Hold ratings.