Empire eyes year-end for grocery code of conduct, but others skeptical

Canada's second-biggest grocery chain Empire Co. Ltd. is pressing ahead to establish a blueprint to end industry bullying before a government deadline expires at the end of the year, but others are warning that progress could be slower than expected.

On Thursday, Empire chief executive Michael Medline — who has teamed up with food producers to push for changes in how big grocers treat their suppliers — told shareholders at an annual meeting the firm has “moved the needle” with its campaign for new rules and government oversight in the industry.

Medline has warned that relationships between supermarkets and food producers are the most frayed he's seen in his decades in retail. A convention of federal, provincial and agriculture ministers — known in the industry as the FPT — have given the grocery business until the end of the year to come up with a proposal that will solve years of infighting over the fees and fines the big grocers charge suppliers.

Empire, which includes the Sobeys, Safeway and FreshCo stores, on Thursday said it was confident that the industry — represented by a handful of trade associations, alliances and lobby groups — could come up with a “meaningful proposal” by the deadline.

“We will not let this issue rest without an industry-led solution that is mandatory and includes government oversight,” Empire spokesperson Jacquelin Weatherbee said in an email.

The comments on the code of conduct came as Empire booked first-quarter net earnings of $188.5 million on sales of $7.6 billion, coming close to matching its COVID19-driven profit from a year ago, which also included a “significant” real estate transaction.

Others warned that December is too soon to get a divided industry to draft something as complex as a code of conduct proposal.

“It's not going to happen,” said Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers. “There's too much work ahead.”

A code of conduct, already used in the United Kingdom and Australia, has been debated in Canada for years. That debate became supercharged during the pandemic, when a series of controversies around fees and fines attracted government attention, and many of the top grocers then dropped their long-held opposition to a code.

The FPT hired a third-party facilitator to help the trade associations and alliances figure out how to agree on a code of conduct.