Snack food giant Frito-Lay has once again hiked prices at some grocery stores in Canada, another sign of inflation in food products that retailers say is expected to continue.
Industry association the Canadian Federation of Independent Grocers confirmed that PepsiCo-owned potato-chip manufacturer Frito-Lay imposed price increases on a number of its member stores this week. The snack food conglomerate, which owns brands such as Lay’s, Doritos, Miss Vickie’s and Tostitos, made headlines last year when a standoff emerged with Loblaw Cos. Ltd. over an earlier price-increase demand. At the time, Frito-Lay halted shipments to Loblaw stores for weeks as the retailer and its supplier failed to come to an agreement.
PepsiCo PEP-Q did not respond to a request for comment on the price increase, or answer questions about whether the increases were also imposed on its larger grocery partners in addition to the independents.
“The timing of the Pepsi-Frito Lay price hike coming exactly one week before the House of Commons resumes its hearings on price inflation, is actually good in that it again shows that there are many price increases being imposed on retailers,” said Gary Sands, vice-president of government relations for the Canadian Federation of Independent Grocers. “If you are, for example, an independent grocer with [profit] margins of around 2 per cent, then increases in costs such as the double-digit price hikes from Pepsi-Frito Lay, simply have to be passed on to the consumer. There is no other option.”
David Lamantia, owner of Lamantia’s Country Fresh Market in Lindsay Ont., said he only learned about the price hike on Tuesday, when a shipment arrived and the prices on the invoice were up by 10 or 11 per cent for many items. He buys dozens of items from Frito-Lay to stock his shelves including salsas, corn chips, pretzels and potato chips. But Mr. Lamantia said he did not receive advance notice of the price hike, and was forced to scramble to change shelf labels. Small independent stores do not have enough market size to negotiate with large suppliers to mitigate such increases, he added.
“Our choice is, do we want to keep buying it or not,” he said.
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PepsiCo is just the latest example of a wave of price-increase requests that retailers have been fielding from their suppliers. Last week, Metro Inc. CEO Eric La Flèche said that in the dry-goods category alone, his grocery chain had received 27,000 such requests from vendors in fiscal 2022. Metro typically does not accept price-increase requests from vendors over the busy holiday period, but that hiatus came to an end on Wednesday, and Mr. La Flèche said last week that there were thousands of increase requests in the system, and warned that more price hikes will hit shelves in the coming weeks.
Loblaw also announced a partial price freeze over the holiday period, though it only applied to the company’s house-brand No Name products. That price freeze came to an end on Tuesday.
Canada’s grocery sector is facing ongoing pressure over the unusual pace of growth in food prices, which have outpaced general inflation for months. Grocery prices rose by 11 per cent in December compared with the same month the prior year, according to Statistics Canada, slowing only slightly from 11.4-per-cent annual growth in November.
Retailers have stressed that they are not profiting from inflation, attempting to send the message that they are just one part of a complex global supply chain in which costs are increasing at every step.
The news about the Frito-Lay price hike also comes as the industry continues to work on developing a self-regulatory code of conduct designed to govern the relationships between grocers and suppliers. A draft discussion document obtained by The Globe in December included a recommendation that parties come to clear agreements, including on the amount of notice required for cost changes. The industry committee working on the code is also deciding on how it will arbitrate disputes.
“I would hope that it would provide an avenue for us to make a complaint,” Mr. Lamantia said, adding that he supports the creation of a code. “We need something.”