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My perspective on three years of Grocery Code of Conduct development

My perspective on three years of Grocery Code of Conduct development

Author: Michael Graydon/November 24, 2023/Categories: Op-Ed

As the CEO of Food, Health & Consumer Products of Canada and the Co-Chair of the Grocery Code Steering Committee, I've been deeply involved in the development of the Grocery Code of Conduct over the past three years. This journey represents not just a policy shift but a transformative moment for the Canadian grocery industry, one that holds the promise of reshaping it for the collective good.

Over these years, it has become increasingly clear that the imbalance between the handful of corporations that control 80% of Canada’s grocery marketplace and the suppliers that work with them must be addressed. It has long stifled competition and hindered innovation, hurting Canadians and industry as a whole. The protracted and intensive negotiations for the Grocery Code of Conduct, requiring compromises from all sides, reflects our united effort to address and rectify this deep-seated issue.

However, the path has not been without challenges. Some retailers have lost sight or chosen to ignore, the Code's fundamental intent and have sought amendments that risk diluting its purpose. This resistance is grounded in a desire to retain full control of the retailer/supplier relationship. Their actions perpetuate the very imbalances the Code aims to resolve and in doing so, threatens the mission initially laid down by the Federal, Provincial and Territorial Ministers.

The Code itself is not merely a set of new rules; it represents a once-in-a-generation opportunity to correct historical imbalances within our industry. Its development has been a collaborative effort, with retailers like Metro and Sobeys playing a crucial role, showing an understanding of the need for significant change. A successful code requires a cultural transformation across the supply chain, rooted in the desire to create more economic certainty for manufacturers, agricultural producers, and independent retailers.

A key aspect of the Code is its potential to empower independent retailers. By fostering a more dynamic and competitive marketplace through fair supply, the Code aligns with the government’s goal of promoting fair competition in all sectors, including grocery retail. There are no foreign-based grocery retailers lined up to enter the Canadian market.  If we are to achieve the goal of fostering more competition, a vibrant independent retail channel is our only answer. We must find ways to make this happen.

The successful implementation of similar codes in the UK and Australia also provided valuable lessons, demonstrating that changes in the dynamics between retailers, suppliers, and consumers can lead to a healthier industry ecosystem without negatively impacting financial stability. We should take confidence from these markets where the code has impacted inflation through consumer price stabilization and created a business environment focused on end-to-end value and efficiencies. That win-win-win scenario drove investment in innovation and created consumer value in multiple ways. Those choosing to focus on the negative implications of the code, are ignoring the obvious and resisting progress to further their own goals.

The advancements made by Metro and Sobeys in supporting the Code are commendable, yet there remains room for further growth. For the Code to be truly effective, it must be based on the principle of full inclusion, applicable to all products, reinforcing the ideal that a supportive code benefits every aspect of a retailer's business. The treatment of non-food suppliers is the same as their food counterparts.  They too need to support the code to manage their relationship with the retailers.  This code must be category agnostic and not a pick-and-choose exercise.

Despite our advances, we face the potential setback of a few major players not participating initially. The code will establish retail competitive advantage for those who sign on.  Retailers that decide not to join will yield advantage to their competitors. Nevertheless, we remain committed to moving forward. The principles embedded in the Code have the potential to bring considerable benefits to all involved, and we are prepared to work with government to explore regulatory solutions, if necessary, though our preference is for a voluntary, collaborative approach. Accountability is a key factor moving forward. For those who opt out, it's essential that Canadians and government ask why?  Why say no to a proven and transformative solution that promises widespread benefits to retailers, suppliers, and most importantly, Canadian consumers.

Sometimes I think three years isn’t that long, particularly when so much progress has been made. But time is critical.

The Grocery Code of Conduct has become much more than a set of guidelines; it represents a long-overdue commitment to a more equitable and prosperous grocery sector in Canada. Its time is now — let’s get this done.

This op-ed was originally published on LinkedIn.

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About FHCP

Food, Health & Consumer Products of Canada (FHCP) is the voice of Canada’s leading food, health, & consumer product manufacturers. Our industry employs more people than any other manufacturing sector in Canada, across businesses of all sizes that manufacture and distribute the safe, high-quality products at the heart of healthy homes, healthy communities, and a healthy Canada.

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