June 5, 2023
Walmart joins Canadian grocery rivals in pushing back against profiteering claims | CBC News

Walmart joins Canadian grocery rivals in pushing back against profiteering claims | CBC News

Like its Canadian counterparts, Walmart is pushing back against claims that grocers are profiting from the rising cost of food.

Gonzalo Gebara, the head of Walmart Canada, told MPs on the House agriculture committee Monday that rising prices were caused by “a perfect storm” of external factors, not price-gouging.

“While customers only see the final price on the shelf, the reality of food inflation is that there are multiple touch points along the way where inflation has taken hold,” he said.

Overall inflation cooled last month, dropping to 5.2 per cent in February from 5.9 per cent the month previous. But prices for food were up 10.6 per cent compared to a year ago, making February the seventh consecutive month of double-digit increases.

Statistics Canada blamed supply constraints and bad weather in food growing regions for the upward pressure on prices. Fruit juice was up 15.7 per cent — the cost of orange juice, for example, has increased due to the spread of fruit-killing citrus greening disease and climate-related disasters like Hurricane Ian.

Earlier this month, the committee heard from executives from Loblaw, Metro and Empire Foods, which owns Sobeys, FreshCo, Farm Boy, Foodland and other chains.

All three pushed back at allegations that they are profiteering from high inflation. While their profits are up sharply in the pandemic, all three said their profit margins on food are razor-thin.

Loblaw president Galen Weston insisted that higher profits at his company are mostly due to higher sales in non-food items, such as discretionary spending at Shoppers Drug Mart, on its Joe Fresh clothing line and at its financial services arm.

Vegetables are shown in the produce section of a grocery store.
The produce section at a Longo’s supermarket in Stouffville, Ont. in February. Canada’s inflation rate fell to 5.2 per cent in February, the largest deceleration from a previous month since April 2020, according to Statistics Canada. (Emily Chung/CBC)

Gebara made similar arguments during his own testimony at committee, saying that Walmart’s margins on groceries are lower compared to non-food items.

The three Canadian firms said they need to compete with American rivals, including Walmart. 

“We compete against some of the toughest food retailers in the world, including Walmart, Amazon and Costco,”  said Michael Medline, the CEO of Empire Foods, earlier this month.

Weston later followed up Medline’s comments by calling on the committee to ensure that American competitors provide Canada’s Competition Bureau — which is conducting its own probe of grocery prices — with their financial information. Gebara told the committee that Walmart had indeed provided the bureau with the relevant information.

WATCH | Grocery chain CEOs deny profits behind rising food prices

Grocery chain CEOs deny profits behind rising food prices

The CEOs of Canada’s biggest grocery chains faced pointed questions on Parliament Hill about soaring profits and food inflation, but all denied that corporate earnings were behind rising food prices.

While Gebara’s appearance at committee came with less fanfare than Weston’s, the Walmart executive did take some hard questions from MPs. Conservative MPs in particular pressed Gebara on fees and penalties Walmart and other grocery chains charge producers and farmers.

Citing testimony previously given to the committee, Ontario Conservative MP Lianne Rood said Walmart is “considered to be one of the worst” for imposing such fees.

The committee is examining a proposed grocery code of conduct that would govern the relationship between food producers and retailers. Industry negotiations on such a code are ongoing.

In response to Rood’s questioning, Gebara said Walmart was committed to working with the government to implement a code of conduct. He said the company would support more “transparency” in how the food supply chain operates.

The federal budget, set for Tuesday, will include a grocery rebate measure aimed at lower income Canadians to help address the affordability crisis, CBC News has learned.

A senior government official familiar with the budget, but not authorized to speak publicly before the budget is rolled out, told CBC News that the overall cost of the measure is “north of $2 billion” and will benefit 11 million households. It will be facilitated through the GST credit aimed at lower income families.

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