A European grocery chain is boycotting high prices. Could it happen in the US?

Inflation is cooling, but food companies keep raising prices.

In 2022, grocery prices rose more than they had in over four decades, since the “great inflation” of the 1970s. The hair-raising climb has finally stopped, but the pain remains: We’re still paying 25 percent more for groceries than we did in 2019. A pound of ground beef in December 2019 was $3.86 — in December 2023 it was $5.21. A 16-ounce bag of potato chips went from $4.53 to $6.40. The price of a 12-ounce can of soda rose almost 64 percent. Consumer prices tend to go only one way — up.

Despite a falling inflation rate and low unemployment, Americans have a dismal outlook on the economy; food prices being stuck stubbornly high is almost certainly a big reason why. A majority of people, according to a recent YouGov survey, now blame inflation on big corporations seeking maximum profits.

Food companies were quick to pass along their rising input costs to consumers, says Lindsay Owens, executive director of the progressive economic advocacy group Groundwork Collaborative. Now those costs have come down, but “they are not quick to pass along their savings,” she says.

Not only that, but companies haven’t stopped raising prices, partly because demand hasn’t plummeted. PepsiCo, which makes not just beverages (Pepsi, Gatorade, Aquafina) but beloved snacks (Doritos, Cheetos) as well as packaged foods (Quaker Oats), raised prices seven quarters in a row, and by 11 percent just between July and September of last year, according to AP. It plans to make more “modest” hikes in 2024. There’s been anger and pushback from both consumers and lawmakers, and even the president — yet food prices keep trickling higher, even if at a slower pace.

But is another world possible?

In January, a major European grocery chain called Carrefour said it would drop some of Pepsi’s products from over 9,000 store shelves in Poland, Belgium, France, Italy, and Spain, citing “unacceptable price increases,” displaying signs in stores to explain the absence. Across the pond, apparently, it’s not just consumers that try to boycott food brands — powerful grocery retailers get in on the game too. PepsiCo, for its part, is insisting that it pulled out of Carrefour, not the other way around, because it couldn’t agree on a new contract. A PepsiCo spokesperson told the Wall Street Journal that it couldn’t “sustain customer relationships which are no longer profitable.” Neither Carrefour nor PepsiCo responded to a request for comment for this article.

It’s a kind of corporate beef that may feel novel to those in the US, where grocery retailers and food companies have been raising prices with no end in sight for the last few years. In theory, the biggest supermarkets in the nation — Walmart, Kroger, Costco, and Publix — could send a similar volley putting the blame on food conglomerates. Why there hasn’t been a public brouhaha between these factions here highlights the dire state of market concentration in the grocery industry, where a sprinkling of companies pull almost all of the strings.

Has a US grocery chain ever said “no way” to a brand over price?

It’s not quite accurate to call what Carrefour is doing a “boycott.” Not all PepsiCo products are gone from all their 14,000-plus stores, and the industry term for when a store no longer sells a product is “delisting.” It happens from time to time, for a variety of reasons — but usually the impetus for it isn’t so public.

We know Walmart isn’t happy with its price-hiking suppliers, with some food brands reportedly getting pushback from the largest grocery chain in the nation. But the company hasn’t publicly made any threats or taken any action so far. In 2022, CEO Doug McMillon said mildly that the company has been asking suppliers to “help us not have to pass something on to a customer,” that “something” being costs. Mostly, the company line has been that they’re working together with food brands to negotiate prices.

Often we just don’t know why a store stops carrying a brand. It could be that they didn’t sell well enough, or there was another more appealing brand that deserved the shelf space, or an item was hard to get consistently in stock, or its competitors were offering it for a lot cheaper than the store was willing to. What’s notable in Carrefour’s case is that it has not only delisted products from a huge, well-known company, but has also made explicit why it’s doing so: It’s PepsiCo’s fault. It’s a good PR move for Carrefour, and it also handily explains why some sought-after products are suddenly unavailable.

It’s also not the first time that Carrefour, headquartered in France, has been publicly aggressive about food companies’ price hikes. Late last year, it started adding labels next to products such as Lipton ice tea showing that their package size had shrunk but their price didn’t decrease — a practice coined as #shrinkflation.

Why we haven’t seen a grocer vs. food giant face-off in the US

Europe and the US have dealt with food inflation in distinct ways: The former tends to be more aggressive about it. With people clamoring for relief — food inflation in many EU nations has been even worse than in the US — several countries set price caps on food staples; a few got rid of the value-added tax on food (most US states already exempt groceries from the sales tax, though some states have also recently lowered or axed them.) Last year, the French government demanded supermarkets and food manufacturers start their annual price negotiation earlier — they typically agree on prices between December and March, and can’t adjust them for the rest of the year. Meanwhile, US retailers and food companies negotiate prices all year round, which means price hikes can (and do) come at any time.

Owens, whose organization just released a report on how to bring down high grocery prices, called the #shrinkflation labels Carrefour rolled out last year an interesting strategic move. “The [price] negotiations are coming up, and they’re basically driving down the volume of sales in certain companies — sort of saber rattling.”

While President Biden recently called for food companies and grocery stores to end “price gouging” and “greedflation,” the US hasn’t gone after food corporations directly to lower prices. It has beefed up antitrust enforcement and has spent money on bolstering competition in concentrated food industries like meatpacking in the hope of keeping prices lower in the long term. But the fruits of these efforts will take a while to grow; the discontent over food prices isn’t going away.

“In principle, nothing stops companies such as Walmart or Target responding in a similar way to Carrefour,” Isabella Weber, an economist at the University of Massachusetts Amherst, told Vox in an email. “But this would require major political pressure. Retailers will not act on their own, but with the right mix of sticks and carrots they might be mobilized as strategic allies in the fight against the cost of living crisis.”

Walmart versus everyone else

One reason we might not have seen a Carrefour-like campaign play out here is that there’s an even greater power imbalance in the grocery business than in Europe. Neil Saunders, managing director of retail at the consulting firm GlobalData, notes that the European grocery market overall is more competitive than America’s. No single major player wallops all others in market share: In France, the largest grocery chain, E. Leclerc, commands about 24 percent of the market, according to consulting firm Kantar. The next biggest — Carrefour — has about 19 percent. In the US, Walmart possesses about a quarter of the grocery store market (not including Sam’s Club, which it also owns), while its closest competitor, Costco, has just 7 percent.

“I think that the brands are just so much keener to stay on the shelves of grocers like Walmart,” Saunders says. Walmart is the source of about 20 percent of sales for big suppliers like General Mills. The supermarket king may not see a reason to drag disputes out into the daylight. They regularly demand — and get — cheaper prices from their suppliers than smaller competitors can. Those suppliers then make up their losses by charging more to other smaller grocers.

Food company executives have overtly recognized that “capitalism is a little more unfettered in the US than in Europe,” says Elizabeth Pancotti, a strategic adviser at Groundwork and one of the authors of its recent grocery price report. The negotiation approach is different, too — nicer. “They’re like, ‘Look how much volume we can give you if you cut a dollar off the price you’re charging us,’” Pancotti continues. Owning 25 percent of the US grocery market is also a lot bigger than having a quarter of the French market.

Price disagreements between grocery stores and the suppliers that fill their shelves happen from time to time. Retailers want to gain customers who will stuff their shopping carts, so they would prefer the cost of goods not to rise too much — especially if you’re a value chain like Walmart or Costco. In 2017, Walmart reduced their Campbell Soup orders, reportedly over a dispute on discounts and shelf space. Campbell’s sales dipped as a result. It’s not clear how the standoff was resolved, but it’s worth noting that, at the time, Walmart made up 20 percent of the company’s yearly sales.

At the same time, grocers, even ones as mighty as Walmart, have less leverage when it comes to kicking out the likes of Pepsi. The company makes too many popular snacks and beverages; people tend to have strong feelings about Pepsi versus Coke, and no store-brand substitute will do. PepsiCo’s CEO even boasted in an earnings call that people “are willing to pay more” for their brand. On the other hand, people are much more likely to buy the cheapest trash bag or household cleaning product, so it’s harder to push prices up there.

It’s a lose-lose for the consumer — for now

It might be refreshing to see a giant grocery chain attack out-of-control food inflation, but the reality is that meaningful pro-consumer change is unlikely to arise from giant retailers taking a stand on our behalf when the messy root is market concentration.

There’s an incentive for grocers to offer a lower sticker price than competitors, but they — just like food companies — are eager to improve profit margins where they can. One of the most notorious industry practices is something called a “slotting fee,” which is a price that a store charges suppliers to get shelf real estate. Nielsen says slotting fees for new products can cost between $250 to $1,000 per item, and the most expensive slots are areas like the checkout counter, where it’s easy for a customer to impulsively throw a candy bar onto the conveyor belt.

Pancotti calls it a “pay-to-play and a pay-to-stay model,” and says that slotting fees are “ripe for regulation.”

Slotting fees are one more cost that ultimately gets passed on to the consumer. These fees have the added effect of widening the price gap between other brands and stores’ private labels, which grocery giants have been leaning into in recent years. Walmart’s cheaper private label is great for your bank account, but it means giving even more market share to the industry heavyweight — which, in the end, can counterintuitively drive up prices. A dominant retailer like Walmart doesn’t need to keep prices roughly the same (and it hasn’t) — it just has to be cheaper than the other guys that are marking up groceries, and small, independent grocers can’t compete. Pancotti notes that there’s already a federal law, called the Robinson-Patman Act, that outlaws suppliers from giving special discounts to just some of their buyers — like, say, Walmart. But enforcement of the law has fallen to the wayside since the 1980s. Slowly, the small grocers will either fail or try to merge to survive.

The way to discipline continued price hikes is to dismantle food monopolies — but that doesn’t happen in the blink of an eye, especially when so much money is arrayed against it. Whether the Kroger-Albertsons merger, which would make it the second biggest supermarket chain in the US, will be blocked by the government is still up in the air. A quicker balm to high grocery prices would be to increase food stamp benefits and increase eligibility for them, say Pancotti and Owens of Groundwork, putting more money for food into people’s hands.

As grocery prices remain sky-high and continue to creep higher, some retailers want a hard stop, says Saunders. But food brands don’t see a reason to stop. “We’re seeing more of these skirmishes emerge now,” he says. It remains unlikely that grocery retailers will suddenly band together to publicly call out their suppliers. Vox reached out to the four biggest supermarkets in the US, who together make up almost half of the entire market, asking whether they were considering doing something similar to what Carrefour has done. None responded.