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"Being aware of market forces helps understand the structure of the sector in which you compete"


I remember difficult moments in my work life when I was as VP of Crayola Latin America, I had to negotiate the "Annual Vendors" with Carrefour and Walmart, both self-service "tough bones to crack", since they had a negotiating power (at that time) greater than the Crayola one.

A win-win negotiation was very complicated, especially because both retailers had a policy with suppliers who do not have bargaining power, of forcing them to accept returns, under penalty of not accepting them as suppliers.

This bad practice was more than one consignment than a sale, but I suppose that, today, both retailers changed because the market is different now and the code of business ethics has more weight now than years ago.

"Carrefour abandons the products of PepsiCo in France, Italy, Spain and

Belgium" / WSJ


Michael E. Porter, global guru on strategy and competitiveness, is the creator of the concept of the "Five Market Forces", however, there are many other experts in < strong>strategic thinking, which propose a sixth force called "The Power of the State

“Being aware of these five forces can help a company understand the structure of the sector in which it competes and develop a position that is more profitable and less vulnerable to attacks ” / Michael Porter

And speaking of attacks, On January 4, 2024, it was published in the business section of "The Wall Street Journal" the following news: "Supermarket giant abandons Pepsi and opposes price increases."

To understand this phenomenon, it is necessary to analyze three of the six market forces already mentioned:

1 Customer negotiation power: Carrefour

2 Negotiation power of suppliers: PepsiCo

3 State power: in this case France.

A self-service store is a store format where the customer can personally choose and collect the merchandise they wish to purchase.
It includes everything from basic consumer stores to large self-service store chains belonging to multinational corporations. Most supermarkets, hypermarkets, department stores and large specialized stores participate in the self-service system.

Starting from the definition of what the self-service sector is, in France, we must keep in mind that it is a sector concentrated in a few players, where the undisputed leader is Carrefour.

  1. Carrefour: focused on the entire self-service sector; was born in France for which can be found on almost every corner. Its products and prices do not tend to vary compared to those in Spain, so we could classify it among the most expensive supermarkets. A point in its favor is the wide range of international products.

  2. Auchan: focused on the entire self-service sector; also known in Spain Like Alcampo, it has a wide range of products.

  3. Leclerc: focused on a niche market; supermarket-shopping center, Limited product offering and lower prices than Auchan.

  4. Monoprix: focused on a niche market; the quality of its products is very good; it is a niche with high purchasing power and a limited product offering.

  5. Lidl and Leader Price: both focused on a market niche; they are the favorite supermarkets of students. Their prices are similar, that is, much cheaper than in the rest of the self-service markets mentioned above.


Considering the above, it is evident that the French self-service sector is concentrated in five players, where Carrefour, being the leader, has enough Negotiation Power as a Customer to be able to pressure PepsiCo to lower its prices.

On the other hand, being such a powerful Multinational, PepsiCo, whose brand is global, has sufficient Negotiating Power as a Supplier, to resist lowering their prices, especially if we take into account that at a global level the "Colas" It is mainly concentrated in two brands: Pepsi Cola and Coca Cola.

In addition, PepsiCo has the competitive advantage of being in the "Food and Beverages" sector and its closest competitor (Coca Cola), is only in the Beverages segment: let us remember that a Sector is made up of Industries, Industries are made up of Segments and segments are made up of market niches.

Alexandre Bompard, president of the Carrefour group
Alexandre Bompard, president of the Carrefour group

Carrefour's threat to abandon several PepsiCo products to protest what it called unacceptable price increases is a rare public confrontation between a supermarket and a food manufacturer after more two years of rising prices.

Carrefour, which operates thousands of stores in more than 30 countries, said it would stop selling Pepsi, Doritos and other products in France, Italy, Spain and Belgium; A spokesperson for the French company said it had been decided to add notes to store shelves to explain the changes; This note explains that the company no longer sells items such as Doritos, Cheetos, Banana Chips, Lipton Tea Snacks, Pepsi, 7UP and Quaker foods.

E. Leclerc supports Carrefour's maneuver to pressure manufacturers Michel-Édouard Leclerc has been in favor of putting pressure on "large suppliers" to reduce or moderate prices.
Michel-Édouard Leclerc has been in favor of putting pressure on "large suppliers" to reduce or moderate prices.

A PepsiCo spokeswoman commented that "we have been in discussions with Carrefour for many months and will continue to participate in good faith to try to ensure that our products are available" and declined to comment further.

In October PepsiCo CFO Hugh Johnson told the Wall Street Journal that product price increases would slow in 2024 and be more or less in line with the general rate of inflation. Hugh added that the company is scheduled to report its latest quarterly results next month and has forecast 13% profit growth and 10% revenue growth by 2023, excluding currency impacts due to the COVID-19 pandemic.

Walmart CEO Doug McMillan said in November "we could be going through a period of deflation in the next few months. And while that would put more unitary pressure on us, we welcome it because it is better for our clients."

Callum Elliott - Director Senior Analyst at AB Bernstein |
Callum Elliott - Director Senior Analyst at AB Bernstein | Callum Elliott - Director Senior Analyst at AB Bernstein |

Europe accounted for about 14% or approximately $9 billion of PepsiCo's global revenue in the first nine months of 2023.

Bernstein analyst Callum Elliott estimates that Carrefour, which has stores in France, Italy, Spain and Belgium, represents 0.25% of Pepsico's global revenue.


In France, food price inflation increased to double digits in 2022 and reached almost 16% in March 2023; In December food prices increased by 7.1% in the last twelve months so the French government has also criticized the main manufacturers and said it would pressure them to lower prices.

This message from the French government is a clear example of "State Power, considered the Sixth Force of the Market".

Carrefour's decision on PepsiCo products comes about four months after the retailer began placing labels on products it claims are subject to so-called inflation shrinkage, when the quantity of a product decreases in its packaging, but the retail price has not changed.


The Carrefour case vs. PepsiCo is an example where the negotiation power of the customer (Carrefour) is almost on par with the bargaining power of the supplier (PepsiCo), since both are in a sector where suppliers and buyers are concentrated in not many players.

PepsiCo's strategy of frequently increasing prices until it hits "a ceiling" of non-acceptance by Carrefour, allowed it (PepsiCo) to maintain healthy finances with 13% profit growth and 10% revenue growth by 2023, however, there are three risks:

  1. Carrefour does not accept the latest increase; however, PepsiCo is already protected with previous increases, so profits grew 13%. As PepsiCo's CFO said: "product price increases would slow in 2024 and be roughly in line with the overall rate of inflation."

  2. That a deflation phenomenon occurs (see the inflation graph in France), where Carrefour and the State pressure PepsiCo to lower its prices, to which it is possible that PepsiCo access through promotions and discounts, without moving the price.

  3. That its image (positioning) is affected, because Carrefour began to place labels on products that, according to it, are subject to the so-called shrink inflation, that is, when The quantity of a product decreases in its packaging, but the retail price has not changed and therefore, some sanction from the French consumer protection office.

Without a doubt, given the circumstances and Porter's analysis of market forces, the winner in this negotiation will be PepsiCo due to its successful pricing strategy.


  1. WalMart Case / https ://

  2. Expansion /

  3. / Worldwide Inflation Data / https://www.

  4. Erdozáin Rivera, Juan Carlos. Strategy in Action. Omniverse - eaBC. 2023

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