That bag of Doritos Flamin’ Hot you bought in 2019 for $4.29? It costs about $1.50 more now—and you get fewer chips. Major food suppliers have been steadily raising prices around the world since 2020, when supply chain disruptions and the broader effects of the pandemic drove up costs. Companies claim to be keeping their prices in pace with inflation, but some evidence suggests otherwise. Now, in the face of seemingly endless grocery price hikes, one enormous European grocery chain has drawn a line in the sand.
Carrefour, a France-based superstore, announced to customers that it would no longer be carrying products made by snack food titan PepsiCo in more than 9,000 Carrefour stores across France, Italy, Spain, and Belgium. That includes Pepsi, obviously, but also brands like Gatorade, Cheetos, Fritos, Lays, and Quaker Oats, among others (Pepsi: way more of a snack company than a soda company, it turns out). Carrefour locations across the four countries will instead display a sign explaining that the absence of Pepsi products is due to “unacceptable price increases,” a spokesperson told Reuters.
Could Carrefour’s boycott actually force Pepsi to lower prices? And what are the chances the company reevaluates pricing in the US too? Surely now, as inflation is cooling, and Americans are more upset than ever about grocery prices, prices should be coming down—or at least staying level as costs shrink? Isn’t that how the economy works?
Short answer, probably not. In fact, inflation may not have been to blame for all the price hikes. Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US, a corporate watchdog organization, argues that many corporations have used inflation to raise prices more than they need to. Pepsi execs have also publicly said that they’re not worried about higher prices driving consumers away—people keep buying their products. “Pepsi is not unique in this situation,” Zelnick says. “Over and over again these corporate CEOs are saying the quiet part out loud in these earnings calls where they’re basically saying, ‘We're using inflation as a cover to raise prices.’”
In a statement sent via email, a PepsiCo spokesperson said that “we've 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.” Carrefour didn’t respond to a request for comment.
It’s impossible not to notice how much more expensive food has gotten over the past several years—while the overall consumer price index went up 16.5% between 2018 and 2022, food prices went up 20.2%, according to the USDA. Most of it happened during 2022, when inflation, extreme weather, a major war, and other unpredictable events meant supply chains were supremely messed up; the big logistics knot drove grocery prices up a jaw dropping 11.4%, the biggest annual increase since the ’80s.
Over the past year, believe it or not, price hikes have slowed down—as of November, consumer prices had inflated just 3.1% since last year—which could serve as a predictor for what groceries will cost in 2024. Forecasting from the USDA shows that prices for so-called “food-at-home,” more colloquially called “groceries,” is set to rise 4.6% this year. (So long as there are no unpredictable events, like last year’s avian flu, which made egg prices skyrocket. Luckily, stuff like unprecedented droughts and superstorms barely happen these days.) While consumers undoubtedly want to see prices return to where they were in 2019, slow price increases might actually be the ideal; the Federal Reserve’s preferred inflation rate is 2% per year. If prices were to plummet, the economy could basically grind to a halt, as Jeanna Smialek pointed out on The Daily.
All that said, it doesn’t mean mega-snack conglomerates will definitely slow their roll on price increases. In an earnings call in late 2023, PepsiCo Chairman and CEO Ramon Laguarta said he expected the company to have a “bit more elevated price mix in the equation that in the previous years,” which, if you don’t speak corporate, roughly translates into our products are going to continue to be more expensive. As Laguarta made clear in yet another earnings call in July of 2023, Pepsi isn’t worried that jacking up the price of food will drive customers away. “We've been able to raise prices, and consumers stay within our brands,” he said. Brands like PepsiCo can raise their prices because customers have a strong loyalty to their products, and they know it.
Several major food suppliers have had incredible profits in the last year. In its third quarter report in fall of 2023, Coca Cola boasted that its gross profit grew 12% year over year to nearly $7.3 billion. As of late September 2023, Kraft-Heinz reported a gross profit of more than $6.6 billion for the year, an increase of nearly 15% from the year before. Pepsi, too, has seen eye-popping profits. The company’s net income increased 16.9% in 2022 to nearly $9 billion.
“Over the last year, inflation has come down at a record pace. Wages are higher, but profits continue to rise,” says Zelnick, of the corporate watchdog group. “These corporations are in really good positions to take advantage of this environment where a lot of consumers alike have gotten used to the higher prices and so [the companies] have no incentive to lower their prices.”
So despite pressure in Europe for lower snack prices, it’s likely that your favorite snacks will get more expensive. I also wouldn’t count on your preferred American grocery chain going to bat for you to secure lower prices; while such grocery store boycotts have happened in Europe in the past, it’s a rarity here. Instead, your only option may be to dissolve any sense of brand loyalty you may have in favor of more wallet-friendly options. Perhaps it’s time to consider some of those off-brand chips you’ve been eyeing, because, according to Zelnick, we shouldn’t count on name brand products getting cheaper without a fight. “Corporations are going to continue to price gouge as long as they're able to.”