Profits in the Canadian grocery sector will likely exceed $6 billion in 2023, setting a new record as they rise eight per cent from last year, according to the Centre for Future Work.
New research by the progressive research institute found that food retailers are now earning more than twice as much profit as they did pre-pandemic.
Jim Stanford, economist and director of the Centre for Future Work, is set to present the report’s findings on Monday to a House of Commons agriculture committee meeting on stabilizing food prices.
Citing Statistics Canada data, the report said the net income margin on food and beverage retailing has consistently exceeded three per cent of total revenues since mid-2021, more than double the average margin between 2015 and 2019.
The data shows retailers took advantage of the pandemic and its aftermath to increase their profits, Stanford said in a news release.
“An industry can’t double its profits, if it is merely passing on higher expenses,” he said.
Eric La Fleche, president and CEO of grocer Metro Inc., is scheduled to present during the first half of the committee meeting.
Last week, executives from Loblaw Cos. Ltd., Walmart Canada and Empire Co. Ltd. appeared before the committee.
The major grocers have been under pressure from the government to enact plans that will help stabilize food prices for Canadians. Earlier this fall, the heads of the five biggest grocery companies were summoned by the government to present their plans.
The grocers have also faced pressure to sign on to a grocery code of conduct that’s nearing completion, which proponents say will help level the playing field between suppliers and large retailers.
On Thursday, federal Agriculture Minister Lawrence MacAulay said he and his provincial counterparts, along with federal Industry Minister Francois-Philippe Champagne, will be meeting to discuss options for both provincial and federal governments if the major grocers don’t sign the code.
Loblaw chairman Galen Weston told MPs last week that the company is concerned certain provisions in the code will raise grocery prices for Canadians as it gives too much negotiating power to large multinational manufacturers.
He said the grocer will sign the code, but not in its current form.
Walmart Canada CEO Gonzalo Gebara told MPs the company is “not in a position at this time to commit” to the code. He said the current version includes provisions that “create bureaucracy and cost, cost that will inevitably end up on shelf prices.”