Canadian grocer, supplier plan code of conduct

Sobeys – owned by the proposed code-signer Empire

In the series between grocers and food manufacturers in Canada, an agreement was reached that retailers would arbitrarily increase the fees they charge suppliers for selling their products.

Empire, Canada’s second largest grocery retailer – chains including Sobeys – has agreed to establish a Canadian Food, Health and Consumer Goods Code of Conduct (FHCP) that represents the Canadian food sector.

Walmart, the grocery chain that raised its fees and caused the dispute last July, has not yet added a name to the proposed code, and Metro Inc., which has followed suit, has not yet done so.

Michael Medline, CEO of Empire, said last October that Sobeys will not follow Walmart and Metro Inc’s steps to increase fees, describing the move as „hard to believe and off-putting”.

Empire and FHCP say they promote „fairness and transparency in Canadian grocery retailing” through the proposed code and encourage other grocers, suppliers and industry stakeholders to come forward to support and contribute to this proposal.

According to Empire and FHCP, the draft code aims to stabilize relationships between retailers and suppliers by requiring fair and efficient handling of all negotiations and trade agreements.

FHCP has advocated a code in various guises over the past two decades, based on complaints of unfair practices in the marketplace on issues such as arbitrary fees, cost increases imposed without notice, and late payments.

Empire agrees with FHCP that the „negative ripple” effects of poor retail-supplier relationships can find their way to consumers and affect pricing, product selection and employment opportunities in Canada.

These practices create „very challenging conditions” for suppliers and manufacturers to succeed in Canada, and suggest that the proposed Code will „create a safer and more transparent environment in which suppliers are safe in products, facilities, manufacture and use Job creation can invest „.

Medline said: „The Canadian food industry has made unprecedented strides in managing the Covid-19 pandemic as retailers and suppliers have worked together to protect the food supply chain and serve customers like never before.

„This goodwill was a positive development at a difficult time. Let’s not go back to the old approach. We started to work seriously with the FHCP on this value-based proposal in autumn 2020. We hope that our general proposal will do so. ” Be a stepping stone to advancing our industry. This code is of benefit to consumer products companies and retailers, as well as to everyone else in the food supply chain, including farmers and customers. „

Those who are behind the proposed code suggest adding reassurance to suppliers by establishing standard rules for cooperation between the parties. The Code would enshrine in good faith a number of industry business principles, such as written agreements between major retailers and suppliers, to ensure that changes in business conditions are not arbitrarily imposed.

Retailers would also need to appoint a code compliance officer to oversee code compliance and would be tied to the establishment of a state judiciary system to handle complaints about unfair practices under the code, the creators hope.

Michael Graydon, President and CEO of FHCP, said, „Retailers and suppliers are tough and savvy, and our companies don’t always agree. However, we believe we can build a supply chain on mutual trust that treats businesses of all sizes fairly and delivers for all Canadians who count on us every day. „

It was eight months ago when the local branch of US supermarket giant Walmart notified vendors that they were raising fees for selling their products both in-store and online.

United Grocers Inc., a group that represents large grocers like Metro Inc. and Alimentation Couche-Tard, told suppliers that they expect the same terms as their competitors.

The measures have revived calls for a review of the power of supermarkets, and in response, food organizations in Canada have teamed up with beverage industry organizations and agricultural groups to urge the country’s government to act.

just-food asked Walmart and Metro Inc. if they intend to sign the proposed code of conduct.

Read September Just-Food Analysis – Can Canada’s Grocers and Suppliers Relax?