Price gouging allegations ‘not true’

Grocery CEOs deny claims food price inflation is driven by profit-mongering

The leaders of Canada’s major grocery chains insist that food price inflation is not caused by profit-mongering and that their margins on food-related profits have remained low.

The CEOs and presidents of Loblaw Cos. Ltd., Metro Inc. and Empire Co. Ltd. — which operates chains including Sobeys, Safeway and FreshCo — appeared Wednesday in front of a parliamentary committee that is studying inflated grocery prices.

Their testimony came amid calls from federal politicians, including Finance Minister Chrystia Freeland and NDP Leader Jagmeet Singh, for the industry to be more transparent about what is driving its record-high profits.

It is “false” to suggest that grocers are responsible for high food prices, all three leaders told members of Parliament, saying food inflation is a global problem.

“It doesn’t matter how many times you say it, write it or tweet it. It simply is not true,” said Michael Medline, the president and CEO of Empire. “The truth is we are at the end of a very long food supply chain that has economic inputs at every step and stage.”

Grocery prices were up 11.4 per cent in January compared to a year ago, nearly double the overall rate of inflation of 5.9 per cent.

At the same time, there has been a rise in corporate profits writ large, and major grocers have been outperforming. All three companies posted higher profits in the first half of 2022 compared to their average performance over the past five years, according to a report last fall by the Agri-Food Analytics Lab at Dalhousie University.

Loblaw’s gross profit in the first half of 2022 beat its previous best results by $180 million — equivalent to about an extra million dollars a day, the research found.

Galen Weston, the billionaire chair and president of Loblaw, said the company has made bigger profits off financial services and apparel and pharmacy sales, which he said represents more than half of its business. He said the company’s profits amount to about $1 for every $25 spent on groceries, and food prices have increased about 25 times faster than profit margins on food product.

“The idea that grocers are causing food inflation is not only false, it’s impossible,” he said.

Earlier on Wednesday, Freeland said at a news conference that the CEOs “absolutely do have a responsibility to all of us to be transparent” about why prices are so high. “And I hope they’re going to tell us that the prices are going to start coming down,” she said.