2. Grocery code of conduct will be implemented
At SKUFood, our perspective is you need to understand consumers and customers if you want to be successful in the food and beverage industry. Our annual trends are created based on exposure to both key stakeholders. When we are doing our job we support you to get your products on the shelf and into the shopping cart.
Over the first 10 weeks we will cover one of our trends each week. We want to explore them in more detail and give you some options, understand the impact, provide ideas ideas and strategies you can implement in your business. The grocery code of conduct has been in the works for quite some time. In 2024, we finally got confirmation that all stakeholders had stepped up to the table to sign on.
Where things stand right now
If you go to the grocery code of conduct website, you will see the following message:
The Grocery Sector Code of Conduct Interim Board of Directors is pleased to inform the FPT Agriculture and Agri-food Ministers that we have the commitment of all the major grocers to support the Grocery Code of Conduct. This includes all the national grocers and the many regional and local independent grocers from coast to coast. In addition, we have the commitment of all key suppliers, large and small, in the country’s food supply chain.
While there is still much work to be done, including the development of the processes required to ensure an efficient and effective implementation, the establishment of an operating office, the hiring of an adjudicator, industry education, and much more, we are delighted to report that all stakeholders have expressed their desire and their commitment to assist and support the implementation of a voluntary industry-led Code in Canada. The commitment of the major grocers underscores the importance of a fully inclusive, voluntary Code developed and managed by stakeholders across the entire grocery supply chain.
Note: FPT stands for federal, provincial territorial
The good news is that all of the players have agreed to the contents and they did not have to be forced to play by these rules. The bad news is we still do not have this in place to impact how our industry operates.
Within the documents posted on the website, it does state parties need to be in compliance by June 1, 2025. Hopefully we will see this move forward by this date.
On the website there is one section labelled code documents. When you click on this link you will have access to the most recent version of the code of conduct, the operating rules and the bylaws.
What suppliers should consider
There is a clause in the code that refers to forecasts for volume. This can be a challenge. It is clear suppliers and retailers should collaborate and mutually agree on forecasts. This does mean you will have to do some work but it also should prevent a retailer from arbitrarily deciding how much will sell or should have sold.
The code is also clear about timing for cost changes. This has been a major issue in Canada. Retailers just taking too long to make a decision. It does state timing around cost increases should be clear in agreements between retailers and suppliers. Check your agreements or pursue putting something in place.
There are a number of classes of members. Fees have not been determined for each class of membership. Once the board is in place they will determine the fees by class of membership. They are outlined in the bylaws as follows:
- Class A Members – Primary Producers selling Grocery Products directly to Canadian distributors/wholesalers and Retailers shall be eligible for Class A membership in the Corporation.
- Class B Members – SME Manufacturers/Suppliers of Grocery Products with Annual Sales of Grocery Products to Canadian Retailers equal to or less than the amount determined by the Board from time to time shall be eligible for Class B membership in the Corporation.
- Class C Members - Large Manufacturers/Suppliers of Grocery Products with Annual Sales of Grocery Products to Canadian Retailers of more than the amount determined by the Board from time to time shall be eligible for Class C membership in the Corporation.
- Class D Members - Non-Affiliated Wholesalers/Distributors of Grocery Products shall be eligible for Class D membership in the Corporation. For the purposes ofthese By-Laws a Non-Affiliated Wholesaler/Distributer is a wholesaler or distributor that is not controlled by a Retailer.
- v. Class E Members - Independent Retailers of Grocery Products in Canada with Annual Sales of Grocery Products equal to or less than the amount determined by the Board from time to time shall be eligible for Class E membership in the Corporation; and
- Class F Members - Large Retailers of Grocery Products in Canada with Annual Sales of Grocery Products in Canada of more than the amount determined by the Board from time to time shall be eligible for Class F membership in the Corporation.
For produce suppliers the Dispute Resolution Corporation will still be in place.
In section 5 of the code, it is clear all members need to have a person designated to speak on behalf of the company for issues related to the code. It also states members have a duty to inform employees of the provisions of the code. Ignorance will not be a defense.
We have maintained since the beginning the most valuable part of this is the Dispute Resolution Management Process (DRMP). We know there are examples where certain companies in the value chain leverage their position to force others to pay or take actions. This is in place and should, first be a deterrent and second a place to get issues resolved by an independent third party.
This has taken a long time to get across the finish line. In fairness to those at the negotiating table they do have businesses to operate and the last few years have presented many challenges. It will be good to see it in place and hopefully more focus on collaboration to sell more.
Peter
SKUFood Recipes for Success Podcast
In this episode, we’re excited to feature Carzan Local Meats, a family-owned business from Southey, Saskatchewan, dedicated to producing premium grass-fed beef and jerky products. Founded on the principles of sustainability and regenerative ranching, Carzan has become known for its locally raised meats and innovative flavour offerings in their growing jerky business.
Join us as we delve into their journey with Carter and Carmen, from their family roots to their commitment to providing top-tier products that reflect their passion for sustainability and community.
Get ready to hear the inspiring story behind Carzan Local Meats.
Costco rejects challenge to DEI policies
Recently, we are seeing shifts in many policies with U.S. based companies. Often these enterprises operate in Canada and what happens south of the border, impacts their operations in Canada.
The National Center for Public Policy Research (NCPPR) has submitted a shareholder proposal that Costco conduct a review of the company’s diversity, equity and inclusion (DEI) policies and publish the results. The Costco board has rejected this challenge. This is noteworthy because a number of other large businesses, including Walmart, have made changes as a result of challenges from NCPPR. This conservative think tank is encouraging people to shop elsewhere if Costco do not conduct the review. It would be interesting to know if Costco considered the impact of the Loblaw boycott in Canada last year. A different reason but using consumers to vote at the cash register and influence corporate behaviour.
I do have travel coming up to Toronto, Calgary, Lethbridge and Niagara Falls so if you want to connect or have an event in any of these locations give me a call or send me an email.