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Loblaw vs. Frito-Lay: Snacks to return to store shelves after price dispute

Click to play video: 'Frito-Lay snacks return to Loblaw stores after price dispute' Frito-Lay snacks return to Loblaw stores after price dispute
Frito-Lay snacks return to Loblaw stores after price dispute – Apr 10, 2022

Loblaw Companies Ltd. has said that snack food varieties by PepsiCo Inc. will return to store shelves across the country following a price dispute that stalled shipments to the Canadian retailer for well over a month.

In an email Sunday to Global News, a Loblaw spokesperson confirmed that shipments will resume on Monday.

“All along, this was about providing value to our customers. We’re happy to have a wider assortment in our chip aisle once again, with a mix of new Canadian flavours and classic favourites, at varying prices to suit our customers’ needs,” said Catherine Thomas, vice president of communications at Loblaw.

Products will begin shipping on Monday and the company expects to be fully stocked before the Easter weekend, she added.

Read more: Doritos maker Frito-Lay halts shipments to Loblaw over price dispute

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Thomas declined to comment on the details of the negotiations.

PepsiCo confirmed to Global News on Monday that the dispute had been settled.

“We have now mutually resolved matters with one of our valued retail partners, and we thank our loyal consumers, our employees and our customer partners for their support through this challenging time,” said PepsiCo spokesperson Sheri Morgan.

“We are committed to our Canadian manufacturing and operations and look forward to resuming distribution of our products from coast to coast in the coming days,” she said in an email.

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The dispute concerned pricing between Frito-Lay Canada, which is owned by PepsiCo, and Loblaw Companies Ltd. as the maker of brands like Cheetos, Doritos, Lays, Ruffles and Sunchips tried to recoup higher costs.

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The situation left the chip and snack food aisle of many Loblaw stores less full than usual as the retailer relied more on house brands, such as President’s Choice or No Name.

The dispute started in February 2022 and PepsiCo spokeswoman Morgan said then that it was a “temporary disruption.”

“Our business has faced unprecedented pressures from rising costs of items including ingredients, packaging and transportation,” she said.

“To help offset these pressures on our Canadian operations … we have made adjustments to our prices that are consistent across the marketplace.”

Loblaw spokeswoman Thomas had said the grocer was “laser-focused” on minimizing retail price increases.

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“When suppliers request higher costs, we do a detailed review to ensure they are appropriate,” she said. “This can lead to difficult conversations and, in extreme cases, suppliers don’t ship us products.”

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The rift between Frito-Lay and Loblaw exposed deepening tensions in Canada’s food industry that many experts said could worsen as supply chain challenges and inflation continue.

Some argued at the time that grocery retailers were simply trying to keep sticker prices low for consumers and stop suppliers from using inflation to justify unreasonable price hikes.

Others suggested grocers are using their market strength to bully suppliers and pad their bottom lines.

“It’s challenging that it has devolved into such a confrontational relationship,” Michael Graydon, CEO of Food, Health & Consumer Products of Canada, which represents Frito-Lay, said at the time.

Read more: Where milk costs the most in Canada – and why you might soon pay more for coffee and pizza

“The level of frustration is growing.”

The increase in wholesale prices some suppliers are seeking from retailers will help mitigate ongoing inflation but won’t completely offset higher costs, he said.

The final price consumers pay in stores is set by grocery retailers, Graydon said.

“This is a cost increase from the manufacturer to the retailer,” he said. “The manufacturer does not set retail pricing. It is set exclusively by the retailer.”

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— With files from The Canadian Press 

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