Grocery chain bosses say they are not to blame for high prices

Spread the love

Food chain bosses say they're not responsible for high prices

Loblaw boss Galen G. Weston during his hearing with the House Agriculture and Agri-Food Committee

The bosses of Canada's largest grocery chains have dismissed claims that they are profiting from high inflation.

They claimed in unison before a parliamentary committee in the Commons on Wednesday that they were not the cause of high food prices.

We don't profit from inflation, no matter how many times you say it… That's just not true, says Empire CEO Michael Medline Foods, which owns Sobeys, FreshCo, Farm Boy, Foodland and other chains.

The Standing Committee on Agriculture and Agri-Food is investigating the causes of food inflation, which has reached an all-time high.

Mr. Medline was called in, as were rival Galen Weston, who runs Loblaws, and Eric LaFlèche, chairman of Metro, owner of Food Basics and other chains.

These three grocery chains make up the majority of the Canadian grocery industry, with thousands of stores across the country. Profits for all three companies have risen sharply during the pandemic, but they say their food profit margins are very slim.

It is folly to suggest that An unprofitable grocery store is somehow better for customers, Medline said. Like all Canadians, we look forward to seeing an end to this difficult period of inflation.

Food prices in grocery stores rose 11.4% in January, compared to the last year.

For his part, Mr. Weston insisted that higher profits at Loblaws were mainly due to higher sales of non-food items, such as discretionary spending at Shoppers Drug Mart, its Joe Fresh clothing line. and its financial services subsidiary.

“As unexpected as it may seem, grocery chains are operating with extremely low profit margins, meaning we have minimal influence on inflation.

— Galen Weston, Loblaw Boss

The Loblaw boss added that the profit margin for the company's grocery arm is around 4%.

This means that even if the industry made no profit, a $25 grocery bill would still cost $24, he said. declared. So the claim that Canadian grocers can fix food price inflation is simply not true.

Mr. Weston cited his company's high-profile price freeze on thousands of No Name-branded items over the holiday season. Critics dismissed it as a publicity stunt, but Mr. Weston argued that this price freeze saved Canadians $45 million at the cash register during the three months it took place. lasted this measure..

He also said his company pushed back on price increases by refusing to accept $500 million in unwarranted cost increases from suppliers. He also claimed that on products such as milk, butter, some cheeses, and vegetable oil, the company actually loses money on every sale.

Our retail prices have not increased faster than our costs, Weston said. So no matter how many times you read it on Twitter, the idea that grocers are causing food inflation is not only wrong, it's impossible.

Mr. Arrow went even further by claiming that his company's profit margin on his food business is actually lower today than it was before.

“Our profit margin on food actually declined, although it was offset by a higher margin on pharmaceuticals.

— Eric La Flèche, President of Metro

Focusing on grocers will not solve the problem of food inflation, because we are not causing it and we are not benefiting from it, Mr. La Flèche insisted before the committee.

Food prices in grocery stores rose 11.4% in January from a year ago. It's also nearly double the headline inflation rate, which was 5.9% in January.

At a Wednesday afternoon news conference in Mississauga, Ont., Economy Minister Chrystia Freeland said she was glad to see the committee is hearing from major grocers. /p>

The Deputy Prime Minister says CEOs must explain why prices have risen dramatically in their supermarkets.

CEOs certainly have a duty to all of us to be transparent about why these prices are so high, Freeland argued. And I hope they will tell us that the prices will start to come down.

Other senior executives of these great grocers had already testified in the Commons , but New Democrats in particular had lamented the absence of the CEOs themselves.

NDP Leader Jagmeet Singh flooded his social media with posts announcing his questioning of Galen Weston, the billionaire chairman and CEO of Loblaw. He told reporters on Wednesday that more than 2,000 people submitted questions to the NDP to ask the big grocers.

We're going to ask them some tough questions. This is one of the most important responses we have received from the public, he said.

Canadians tell us they have misery. They have trouble shopping. At the same time, these grocery stores aren't just showing normal profits, high profits: they're showing record profits. They have never done better. Their CEOs get huge bonuses.

Asked what the NDP would do differently to remedy the situation, Singh said the government could strengthen competition laws and introduce a tax on excessive profits targeting this sector, as the UK and Spain have done.

With information from CBC, and La Canadian Press

Previous Article
Next Article