Groceries: 1) Food Prices Expected To Rise More Slowly In 2024 2) Major Retailers Must Sign Grocery Code Of Conduct, Federal Agriculture Minister Says, 3) Canada’s Grocery Retail Sector One Of The Most Competitive On Earth: Sobeys CEO
1) Food Prices Expected To Rise More Slowly In 2024
Competition Could Lead To Mild Deflation On The Prices Of Some Essential Food Items
Courtesy of Barrie360.com and Canadian PressPublished: Dec 7th, 2023
Rosa Saba, The Canadian Press
Food prices will keep rising in 2024, though at a slower pace, according to the latest Food Price Report.
The 14th annual report by Dalhousie University, the University of British Columbia, the University of Guelph and the University of Saskatchewan predicted that food prices will rise between 2.5 per cent and 4.5 per cent next year as inflation continues to moderate.
However, grocers will be in fierce competition next year to try to win back loyalty from customers who have been shopping around more to try to save money, said project lead and director of Dalhousie’s Agri-Food Analytics Lab Sylvain Charlebois.
“I think loyalty is going to be a huge battleground,” he said.
This competition could lead to mild deflation on the prices of some essential food items, he said, even as overall food prices will continue to rise.
“How do you get people to come back? (With) rebates, discounts. And that leads to price wars.”
Some categories are predicted to experience faster price rises than others in 2024.
Bakery, meat, and vegetables are forecast to see prices go up the most, at between five and seven per cent, the report said. Prices at restaurants and for seafood products will rise between three and five per cent, while dairy and fruit will see prices rise between one and three per cent.
But despite the continued rise in food prices this year, researchers for the report found that in 2023, customers actually spent less in dollar amounts than last year’s report predicted, as they cut back on spending at restaurants and at grocery stores.
The estimated total annual spending tally in 2023 for a family of four —two parents, a teenage boy and a pre-teen girl — was $15,595.40, almost $700 less than last year’s report predicted.
This finding was “a bit of a shocker,” said Charlebois. While it was expected that Canadians would cut back on spending as shelter costs went up amid interest rate hikes, the scale at which they cut back was a surprise to the researchers, he said.
“It points to how extremely challenging 2023 was to a lot of people,” he said.
“Interest rates went up so quickly, it didn’t give time for households to adapt.”
The report predicted that same family of four will spend around $700 more on food in 2024 than they did this year, an estimated $16,297.20.
In 2024, the outsized food inflation that’s persisted for the past few years will finally come to an end, Charlebois predicted, returning to a more normal level as overall inflation does the same.
The Bank of Canada hit pause on interest rate hikes in the final months of the year as its policy continues to work its way through the economy. Inflation isn’t yet at the central bank’s target rate, hitting 3.1 per cent in October, but is a far cry from its peak of 8.1 per cent in June 2022. Grocery inflation, meanwhile, was at 5.4 per cent in October, lower than September but continuing to be elevated compared with the overall inflation rate.
Climate change is expected to continue influencing the prices of some food items in 2024, the report predicts, especially as climate-related events become more frequent and hit harder.
Right now, climate events are affecting the prices of three food products in particular, which Charlebois said will likely continue to rise in the coming months.
Firstly, beef prices are on the rise as drought in the Midwest and prairies has led farmers to cull their herds, said Charlebois.
Meanwhile, the price of cocoa is being driven up by conditions in Ghana and the Ivory Coast, while the price of sugar is rising due to weather affecting sugarcane production in some countries, Charlebois said.
“If you like dark chocolate, I would buy it now.”
2) Major Retailers Must Sign Grocery Code Of Conduct, Federal Agriculture Minister Says
Courtesy of Barrie360.com and Canadian PressPublished: Dec 7th, 2023
By Rosa Saba
Federal Agriculture Minister Lawrence MacAulay wouldn’t rule out the possibility of provincial or federal government intervention if the grocery code of conduct doesn’t have every major retailer on board.
In an interview, MacAulay said Thursday he will meet next week with federal Industry Minister François-Philippe Champagne and provincial ministers to discuss options for both provincial and federal governments if the major grocers don’t sign the code.
“Perhaps some changes have to be made,” he said.
MacAulay and Quebec Agriculture Minister André Lamontagne have expressed their disappointment to see the grocery code of conduct has still not been launched after years of work, with some “supply chain partners” hesitant to sign on.
In a statement Thursday, the ministers said the major grocers need to adopt and adhere to the code, and said in the coming days, they will be “reviewing all possible options available to us.”
“Two years of evaluating the situation would seem to me to be long enough,” MacAulay said. “It’s time to move on. Let’s get the code signed.”
At a House of Commons agriculture committee meeting in Ottawa on Thursday on stabilizing food prices, members of Parliament pressed Walmart Canada CEO Gonzalo Gebara and Loblaw chairman Galen Weston on why their companies have not yet signed the code.
Bloc Québécois MP Yves Perron accused both companies of “sabotaging” the development of the code.
Gebara said his company has participated in the development of the code, but is “not in a position at this time to commit” to it.
In the current version of the code, “there’s provisions that create bureaucracy and cost, cost that will inevitably end up on shelf prices,” he said.
Weston said Loblaw will sign the code, but not in its current form.
In a Nov. 1 letter sent to members of both the steering committee developing the code and the industry subcommittee, Loblaw said it’s worried the code could “raise food prices for Canadians by more than $1 billion,” a figure Weston stood by on Thursday.
Weston told MPs on Thursday he’s concerned the code will give too much power in negotiations to large multinational manufacturers. Many manufacturers, he said, are already “signalling or submitting higher than expected cost increases for next year.”
“We were able to push back on 18 per cent of what we believed … to be unjustified cost increases across the industry last year. Based on the way the code is drafted today, we will be severely restricted in terms of our ability to do that.”
Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and chairman of the interim board of directors of the grocery code of conduct, said Thursday that the code is “fundamentally done.”
He praised the statement from the ministers, calling it “much overdue.”
Graydon said the working group responded to Loblaw with what he believes are “very strong responses as to why the provisions they want changed fundamentally can’t be changed.”
He said Loblaw’s requested changes “would fundamentally neuter the code’s ability” to improve how business is done in the grocery industry.
“They want to continue to have unilateral decision power. Well, that is fundamentally why we need a code.”
Graydon, who was co-chair of the steering committee developing the code, said it’s not yet clear whether Loblaw, Walmart or Costco will sign the code.
Costco did not respond to a request for comment.
Gary Sands, a member of the interim board and senior vice-president at the Canadian Federation of Independent Grocers, said the ministers’ statement was a “good first step.”
“I think it sends a clear message to everyone that there’s an expectation on the part of governments that they want the entire industry to support this code,” he said.
The grocers have also been under pressure from Ottawa to provide plans to stabilize food prices at their stores. The government summoned the heads of Loblaw, Metro, Empire, Walmart Canada and Costco to present their plans earlier this fall.
Weston told MPs that that meeting with Champagne resulted in “materially lower prices” for 35 often-purchased items and categories, like milk, butter, eggs and chicken.
“We’re delivering these savings through the pricing and promotional programs that customers understand and respond best to. They are making a difference,” he said.
Gebara said through periods of high inflation, Walmart continues to hold or lower prices where possible, sometimes absorbing or pushing back on cost increases from suppliers. He said the grocer has launched several programs that resulted in lower prices, such as offering Thanksgiving meals at lower prices than last year.
On Monday, Empire Co. Ltd. CEO Michael Medline said his company, which owns Sobeys, has expanded its annual November-to-January price freeze.
“We also have meaningful plans and development to help stabilize food prices past January, but will not discuss these publicly as they remained commercially and competitively sensitive until launched in our stores,” Medline told the agriculture committee.
— With files from Nojoud Al Mallees in Ottawa.
3) Canada’s Grocery Retail Sector One Of The Most Competitive On Earth: Sobeys CEO
Courtesy of Barrie360.com and Canadian PressPublished: Dec 5th, 2023
By Nojoud Al Mallees in Ottawa
The top executive at Sobeys asserted on Monday that Canada has one of the most competitive grocery retail sectors on the planet — even as Canadians continue to feel the bite of higher prices.
“Although our country’s food inflation has been among the lowest in the world, and Canada is among the most competitive nations on Earth when it comes to grocery retail, this provides little comfort to Canadians who are struggling,” Michael Medline told MPs on the House of Commons agriculture committee.
Medline is the CEO of Empire Company Ltd., which owns Sobeys and other grocery store chains.
His appearance came after the committee requested that the top execs of major grocers testify before the committee once again on their plans to stabilize prices.
Industry Minister François-Philippe Champagne announced this fall that Canada’s major grocers — Loblaw, Metro, Empire, Walmart and Costco — had shared plans to tackle rising prices that included discounts, price freezes and price-matching campaigns.
However, questions swirled about what exactly the grocers promised, given the details of the plans were not being shared publicly.
Now, Sobeys has outlined some of the initial steps it has taken.
The company says it historically freezes prices on 90 per cent of packaged products between November and January, and now, it has expanded that freeze to all such products.
“We also have meaningful plans and development to help stabilize food prices past January, but will not discuss these publicly as they remained commercially and competitively sensitive until launched in our stores,” Medline told MPs.
The rapid run-up in grocery prices following the COVID-19 pandemic has led to the heightened scrutiny of Canadian grocers, particularly as some of them have reaped high profits.
And while food inflation — a global post-pandemic phenomenon — slowed in recent months, prices continue to rise rapidly.
In October, grocery prices were up 5.4 per cent compared to a year ago. Meanwhile, Canada’s overall inflation rate was 3.1 per cent.
The phenomenon has raised questions about whether the industry is competitive enough. It even prompted the Liberal government to propose changes to the country’s competition law.
The NDP has been pushing the Liberals to strengthen the Competition Act even further, arguing that changes can be made that would help bring down food prices.
However, Medline maintained during his testimony that the grocery industry is very competitive, and he doesn’t see many barriers to entry.
“I don’t think there have been huge barriers to competition (in) this country, but I’m sure that the government will put in place in the Competition Act even even greater ways where we can compete, and we welcome all that,” he said.
In June, the country’s competition watchdog published a report saying Canada’s grocery sector needs more competition to help keep food prices down, give shoppers more choice and encourage new entrants.
Medline expressed frustration that Sobeys is grouped in with other grocers when it comes to the scrutiny of high profits during a time of elevated inflation.
“I get a little impatient that we’re jumbled up with the entire industry all the time. Every company is different,” Medline said, adding that his company has lower profit margins than its competitors and made less money last year than the year before.
Alistair MacGregor, the NDP agriculture critic, spoke to reporters Monday afternoon ahead of the committee meeting and said he had reviewed the major grocers’ plans to stabilize prices.
“I can tell you after having reviewed the documents over the last couple of weeks that I walked away quite unimpressed,” MacGregor said.
MacGregor said the grocers agreed to share the plans with members of the House of Commons agriculture committee, and in return, the committee promised to keep their contents confidential.
But the MP said the plans include a lot of information that is already public.
“And to tell you the truth, a lot of the information contained in these so-called confidential documents are stuff I could have found by reviewing their weekly flyers and looking with a simple Google search.”
Patricia is the Business Mentor and owner of Grow Vantage and a Past President of the Barrie Chamber of Commerce. She applies over 30 years of business experience (from start-up to corporate) to mentor entrepreneurs. Since 2011, she has held over 6,500 coaching and training sessions in-person and online. Through Ask For Directions Training, her entrepreneurial training program (and parent company Grow Vantage), and as a business coach, she works with start-ups who are new (or who have lost traction) to design, launch and grow their businesses. Along with 20 other expert instructors she teaches strategies in marketing, sales, communications, and finance, as well as practical techniques to increase productivity, and manage their businesses. In other words, everything entrepreneurs need to learn to grow and run their businesses successfully, and avoid the costly mistakes they can't even see coming - that lead to delays in growth and getting stuck.
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