Chairman and President of Loblaw Companies Ltd. Galen Weston Jr. appears before a committee on Parliament Hill in Ottawa, Ontario, on March 8.BLAIR GABLE/Reuters
Members of Parliament pressed top executives at Canada’s largest grocery retailers for answers about high food prices and growing corporate profits, expressing concerns about transparency amid a period of high inflation.
Loblaw Cos. Ltd. L-T president Galen Weston, Empire Co. EMP-A-T chief executive officer Michael Medline and Metro Inc. MRU-T CEO Eric La Flèche defended their companies before the committee in Ottawa on Wednesday afternoon, saying that suggestions that grocery companies were profiteering from inflation are wrong.
The House of Commons committee on agriculture and agri-food hearing is part of an inquiry into whether these chains have benefited unduly from the rise in grocery prices.
“The idea that grocers are causing food inflation is not only false, it’s impossible,” Mr. Weston said. “Retail prices have not risen faster than our costs.”
Mr. Weston said Loblaw profits $1 for every $25 spent at its stores. “Reasonable profitability is an important part of operating a successful business,” he said. “Our profit levels are reasonable.”
Mr. Medline said Empire, which runs Sobeys among other banners, is operating on “paper thin profit margins” of 2.5 per cent. “We at Empire are not profiting from inflation. It doesn’t matter how many times you say it, write it or tweet it. It is simply not true,” he said.
He added that Empire is starting to see indications of inflation peaking and abating this spring, and that it is seeing some signs that supplier requests will slow this April, suggesting that price increases could start to slow in the coming months.
Mr. La Flèche said Metro is part of a supply chain under prolonged stress from increased inflation, and that the retailer is “not causing it, and not benefiting from it.”
MPs repeatedly asked the executives how they could justify rising profits while many Canadians suffer from food insecurity and high costs of living. Grocery prices have been ascending at their highest rates in nearly four decades, and at double the price of the overall inflation rate.
Still, company profits have been on the rise as prices have increased.
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Mr. Weston said those profits were driven by gains in Loblaw’s non-food departments: pharmacy, apparel and beauty. When asked if those figures could be broken down, he said that they contain confidential commercial information, but had submitted reports to the Competition Bureau.
The executives also cited increased costs of supply. The chief executives of Beverage Canada, Maple Leaf Foods Inc. MFI-T and the Dairy Processors Association of Canada – all suppliers to the grocery stores – appeared before the committee on Monday, saying their own increased prices were the result of a number of factors, including labour and packaging.
The companies also attributed higher prices to global events – such as the Ukraine war and weather patterns affecting agriculture – but said Canadian grocery price increases have actually risen at slower rates than in other countries, such as the United States and Britain.
When asked why Loblaw had removed its price freeze on No Name items that had been set over the winter, Mr. Weston said the company had decided to translate those savings to reducing the price of certain other items.
The executives asked why U.S.-based food chains operating in Canada were not being called to meet before the committee. These include Walmart, Costco and Amazon, which owns Whole Foods. Several MPs said they would like to see those retailers appear before the committee as well.
Meanwhile, the companies are in the midst creating a Grocery Code of Conduct, which will aim to increase transparency and predictability. Mr. Weston said Loblaw is “committed to developing an effective code that’s fair and balanced on all sides.”