Frito-Lay has suddenly hiked snack prices — and grocers are calling foul
Canadians likely to face higher food costs this spring
One of Canada’s biggest food manufacturers Frito-Lay has hiked prices at grocery stores yet again, a move that retailers say shows how rampant inflation is impacting the food industry and driving a wedge between stores and suppliers.
Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers, which represents 6,900 independent grocers in Canada, confirmed that several retailers had received notice of a 10 to 11 per cent price hike from the snack food conglomerate Frito Lay, owned by parent company PepsiCo Foods Canada.
“There’s a lot of cost increases retailers are getting and are forced to pass on to consumers,” said Sands. “If you’re an independent grocer and you’re on a low margin of 2 per cent, how do you not pass on increases (from suppliers) that are in the double digits?”
PepsiCo did not immediately respond to an inquiry from the Star about the raised prices and whether the same hikes applied to supermarkets.
Food inflation is driving prices up faster than deals between manufacturers and grocers can keep up, industry experts say. Last year, FritoLay, the maker of popular brands like Cheetos, Doritos, Lays, Ruffles and Sunchips, stopped shipping its snack foods to Canada’s largest grocery retailer Loblaw after a dispute erupted over price increases.
At the time Frito-Lay said it was trying to pass on some of the increased costs from supply chain woes companies have faced during COVID-19.
Canadians already grappling with skyrocketing food costs amid rising inflation will likely have to face even more food price hikes this spring as supermarkets like Loblaws
and Metro end their price freeze which typically runs from November to February.
Supermarket giants have faced increased scrutiny with critics and politicians accusing them of hiking prices faster than necessary and profiting from the worst food inflation consumers have seen in decades.
But retailers say higher costs are being passed on through the supply chain from processors and wholesalers.
Laurie Jennings, owner of Masstown Market, one of the few remaining independent grocers in Nova Scotia, said he was shocked to see the notification of a price increase from Frito-Lay which he received on Monday.
A sales manager of the snack food giant had dropped off the new price list reflecting a 10 per cent bump, which Jennings said was the first he’d heard of the price hike.
“We had already placed an order before we knew prices were going up,” Jennings said. While Jennings said it’s normal to see a 2 or 3 per cent price hike this time every year, the 10 per cent jump was surprising.
“We had to change our prices right then and put new shelf labels and signage up,” Jennings said. As an independent grocer, he added, competing with big chain supermarkets is a constant challenge.
“I have to maintain my margins, which isn’t very big to start with. If I don’t put up the price the same amount that was passed on to me then my margin goes down and I’m making less money,” Jennings said. “If my supplier says this is the price, I don’t generally have the option to say I’m not going to pay them.”
In the coming weeks consumers across Canada should also expect to see higher costs of dairy products including milk, cheese and yogurt, as a 2.2 percent increase in farmgate milk prices comes into effect on Feb. 1.
Every fall, the Canadian Dairy Commission recommends a farmgate price hike for products including milk and butter which come into effect Feb. 1. Processors in turn renegotiate deals with retailers to try and pass their increased costs on — not just the cost of ingredients, but any other costs that have gone up, such as packaging and transportation.
For Jennings, it’s becoming more difficult as an independent retailer to make a profit as prices rise on every level on the supply chain.
“Our margins are shrinking and they’re getting harder and harder to maintain,” Jennings said.
“We have no choice but to raise our prices or shrink our margin. At the end the consumer feels the increase.”