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Canada’s Grocery Industry Looking To Establish ‘Code Of Practice’

Empire, Canada’s second-largest grocery retailer (operator of Sobeys, Safeway, IGA, Foodland, Farm Boy, FreshCo, Thrifty Foods and Voilà), is partnering with Food, Health & Consumer Products of Canada (FHCP), the nation’s largest consumer packaged goods (CPG) manufacturer trade group, to create a code of practice for retailer-supplier dealings.

The ‘Grocery Supply Code of Practice for Canada’ (the Code) aims to stabilize relations between retailers and suppliers by calling for “fair and efficient handling of all negotiations and commercial agreements”. The FHCP has been calling for a Code for the last two decades as a result of complaints of unfair practices in the marketplace relating to issues such as arbitrary fees, cost increases imposed without notice, and late payments.

Announcing the plan, Empire stated that it agreed with the FHCP that the negative ripple effects from poor retailer-supplier relations make their way to consumers and can impact pricing, product choice and job opportunities in Canada. It highlighted that these practices create challenging conditions for suppliers and manufacturers to thrive in Canada.

It is hoped that the proposed Code can create an environment with more certainty and transparency, where suppliers can more confidently invest in products, facilities, and manufacturing and job creation.

The basics of the Code include:

Require negotiated agreements in writing between retailers and suppliers
Ensure open negotiations between retailers and suppliers
Create stability to encourage retailers and suppliers to work together to bring the best products, innovation and value to Canadians
Require retailers to designate a ‘Code Compliance Officers’ to oversee Code compliance
Introduce a government adjudication system to manage complaints of unfair practices under the Code

“The Canadian grocery industry made unprecedented strides in navigating the COVID-19 pandemic as retailers and suppliers collaborated to protect the food supply chain and support customers like never before,” said Michael Medline, President and CEO, Empire.

“This goodwill was a positive development during a difficult time. Let’s not go back to the old way of doing things. We began working in earnest with the FHCP on this values-based proposal in the fall of 2020. We hope our principled proposal will be a springboard to move our industry forward. This Code is a win for consumer product companies and retailers, as well as all other players in the food supply chain, including farmers and customers.”

Michael Graydon, President and CEO at FHCP, added: “Retailers and suppliers are tough and savvy and our businesses do not always see eye to eye. However, we believe we can build a supply chain on mutual trust, one that treats businesses of all sizes fairly and delivers for all Canadians who count on us every day. FHCP and Empire are proud to have translated this common vision into a set of shared principles and a positive framework for the industry.”

Similar codes have been implemented around the globe; most notably, lessons learned from the Groceries Supply Code of Practice (GSCOP) in the UK were used to help create Empire and FHCP’s version.

A draft of Canada’s proposed code was formally submitted to the Federal, Provincial and Territorial (FPT) working group at the end of last week.

FHCP and Empire are calling on other grocers, suppliers, and industry stakeholders to come forward to support and provide input into their proposal.
NAM Implications:

A must-have guide for supplier-retailer relationships everywhere.
And as with the market in Canada, the UK’s GSCOP experience can minimise any tendency to re-invent the wheel…