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Scope on Canada: Grocery Store CEOs Questioned by MPs on High Food Prices, Profits

Published: March 14, 2023
A woman shops for chicken at a supermarket in Santa Monica, California, on September 13, 2022. (Image: APU GOMES/AFP via Getty Images)

On March 8, the House of Commons committee on agriculture and agri-food held a hearing on whether the largest Canadian grocery retailers have unduly benefited from the rise in grocery prices.

Galen Weston, president of Loblaw Cos. Ltd., which owns Superstore, Extra Foods, No Frills,
and others, Michael Medline, CEO of Empire, which runs Sobeys, Safeway, and FreshCo, and Eric La Fleche, CEO of Metro, which runs stores in Quebec, Ontario, and New Brunswick, were questioned by Members of Parliament for answers about high food prices and growing corporate profits.

Under scrutiny

MPs asked the executives repeatedly how they could explain rising profits when many Canadians don’t have enough food and have to pay a lot to live. Grocery prices are going up at twice the rate of inflation and at their fastest rate in almost 40 years.

“We have families going into your stores, looking at the price of items…and putting them back because they can’t afford them,” said NDP Leader Jagmeet Singh. “And they look at you and they see you making record profits. How can you justify that when families are struggling to put food on the table for their kids?”

A 20 CAN $ banknote is seen in a supermarket in Etterbeek on Sept. 2, 2022 in Brussels, Belgium. Lobalws, Canada’s largest grocer, has come under fire after revealing profits for the company surged by 30 percent year-over-year amidst record high inflation and a cost-of-living crisis. (Image: Thierry Monasse/Getty Images)

“The numbers are very large, but it still translates right down to the bottom line at $1 per $25 of groceries,” Weston said. “Our growth in profits in 2022 is 25 times lower than the unprecedented increases in costs that are being faced by the industry and by the world.”

As typical an answer as such to similar questions from MPs, CEOs defended their companies before the committee, saying that suggestions that grocery companies were profiteering from inflation are wrong, particularly because “retail prices have not risen faster than our costs.”

Medline said his company is operating on “paper thin profit margins” of 2.5 percent. “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.

La Flèche said Metro is part of a supply chain under prolonged stress from increased inflation, and that the retailer is “not causing it or benefiting from it.”

Weston explained that Loblaw’s profits came from non-food departments like the pharmacy, clothing, and beauty, but he couldn’t give specifics because the business information was private.

Complex factors

The companies also said that global events like the war in Ukraine and changes in the weather that affect agriculture led to higher prices. However, they said that grocery prices in Canada have gone up at a slower rate than in the U.S. and Britain.

A few days earlier, on March 6, Statistics Canada representatives told MPs on the House committee that about 35 percent of Canadians — up from about 19 percent two years ago — are struggling to pay for groceries as inflation continues to push food prices higher.

Matthew MacDonald, assistant director of Statistics Canada’s Consumer Prices Division, said to the committee that in January 2023, prices in every food category on a year-over-year basis rose even higher than they had been the year before. He listed food categories like meat, vegetables, dairy, and bakery products as examples.

StatCan said in a report that came out in February that about one-quarter of Canadians are having so much trouble with money that they wouldn’t be able to pay a $500 unexpected bill if it came up.

The Financial Consumer Agency of Canada’s research found that almost 40 percent of
Canadians have to borrow money to pay for things like food and rent.