Grocers are fighting back against a wave of suppliers who are looking for more money.
The parent of Frito-Lay's has not sent brands from its food division to the more than 2,400 stores that are part of the Loblaw network.
The photo was taken by Luke Sharrett.
After Frito-Lay cut off Canada's largest grocery store from its product, they are still fighting over the price of potato chips.
At a time when both sides are grappling with the most intense period of inflation in a generation, the standoff has opened a window into private negotiations between grocers and suppliers. It is not uncommon for suppliers to stop shipments when negotiations break down, but the disputes are usually resolved within a matter of days or weeks.
Not this time. Thanks to a report in La Presse last month, the Frito-Lay spat has played out in public from the beginning.
The brands from the food division of the company have not been sent to the stores of the company since February 12. In a statement last month, the manufacturer said it was asking for more money to offset the costs of ingredients, fuel and packaging. It has been flooded with similar requests from suppliers across the country and needs to stay laser focused on minimizing costs as food inflation builds to a 13-year high. Senior executives from both companies are still in regular discussions, but have yet to reach a deal.
Frito-Lay and Quaker Oats Co. are part of the food division of Pepsi.
Old Dutch Foods Inc. and Neal Brothers Foods Inc. are both based in Toronto. Michael Graydon, head of Food, Health and Consumer Products of Canada (FHCP), an industry lobby group, said that the competitors were trying to steal market share by promotingPepsi snack brands.
A former marketing executive at Empire Co. said that it was a dispute about chips that allowed Loblaw to hold out. She said that Loblaw wouldn't have done this with milk.
The move to stop shipping products was once considered to be the option of choice for suppliers, especially with a company like Loblaw, the biggest member of Canada's grocery oligopoly, controlling about a third of the country.
Graydon said that withholding shipments is becoming more common as cost pressures build up throughout the supply chain.
The longest example of a supplier withholding shipments is not the Pepsi-Loblaw dispute.
A source confirmed that a price dispute led Mondel International to stop sending products from its biscuit category to Loblaw. The source who wasn't authorized to speak publicly about the deal said that Mondel ended shipments for about a week and a half.
Mondel said in a statement that rising costs across the business caused the price increase.
Grocers are digging in against a wave of suppliers looking for more money, with a top retail lobbyist suggesting that some suppliers could be using rising inflation as an excuse to raise their prices.
The consumer price index shows that food prices in stores rose in February, driven by higher commodity and fuel costs. Food inflation was the highest in almost 13 years.
In its last earnings report, Loblaw predicted that its earnings per share would increase by double digits.
The impact on shoppers in stores is a key difference in the dispute. The shelves were cleaned of Frito-Lay snacks within days. The company uses its own team of drivers, who bring product to individual stores and stock the shelves themselves, rather than shipping product in bulk to a grocery store. When shipments stopped, there was no Frito-Lay stock left in the system. shelves emptied fast
Email: jedmiston@nationalpost.com
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