Posted at 6:00 a.m.
Fans of Lay’s, Doritos, Ruffles and other Miss Vickie’s brand chips may search the aisles of Maxi or Provigo supermarkets for their favorite snacks, without much success. Frito-Lay Canada, the company behind a slew of bags of chips that take up nearly 80% of grocery store shelf space, is no longer delivering to Loblaw stores after the brand reportedly refused to agree to hikes prices on these products, learned The Press.
Just a few days ago, Quebec merchants who operate a business under the Provigo, Maxi, L’Intermarché, Axep and Pharmaprix banners received a memo from Loblaw informing them that Frito-Lay products would not be no longer offered, without explaining why they will now have to do without the potato chips that normally fill their shelves. It was by talking with delivery people and representatives that the merchants understood the origin of the disagreement. Frito-Lay has decided to no longer supply the stores of these brands, failing to agree on the price increase, explained two merchants who prefer to conceal their identity, for fear of sanctions from the parent company.
Employees working for PepsiCo, owner of Frito-Lay, as well as one of the company’s competitors have also confirmed this information. “Frito-Lay Canada and the Loblaw Group are currently in litigation […]a PepsiCo worker wrote via email. [Loblaw] currently refuses any price increase from PepsiCo Canada. This has been in effect since last weekend. No company will want to brag about it, but it is currently in effect across Canada. »
In Canada, suppliers, at certain times of the year, can ask for a price increase. The final decision rests with the retailers.
However, it is impossible to obtain figures concerning this requested price increase. Asked to explain the dispute between the manufacturer of Lay’s, Loblaw declined to give details about the negotiations, but nevertheless stressed that this type of situation was not commonplace. “We are constantly striving to minimize price increases as much as possible,” explained Johanne Héroux, Senior Director, Corporate Affairs and Corporate Communications, by email. This is a real challenge as the entire industry is under enormous cost pressures, whether it is manufacturing, transportation, ingredients, etc. When suppliers submit cost increases to us, we conduct a rigorous review to ensure that they are appropriate. This process can lead to difficult exchanges and, in very rare cases, cause suppliers to stop supplying us. »
Normally, Frito-Lay chips are delivered twice a week to supermarkets. The aisle of appetizers is therefore likely to be quickly stripped. By going to a Maxi located in Montreal on Thursday, The Press saw that Frito-Lay products were quite rare. Only small bags of Lay’s chips in snack size were found on the shelves. At the end of the aisles, Yum-Yum and Old Dutch branded bags were displayed. “We will no longer receive Lay’s,” said two store attendants who said they did not know how long this situation would last. They decided to go on strike with us,” said one of them, laughing.
Justify the increase
How can Frito-Lay explain a price increase? “This is a confidential matter between PepsiCo and its customer. We are unable to comment on these matters,” PepsiCo responded in an email from the corporate communications department.
The manufacturer of Lay’s and Ruffle potato chips, which operates a factory in Lévis, cannot justify its request for a price increase from Loblaw by the current cost of its potatoes. “For potato chips, prices are determined by contract even before the seeds. So, for a year, it’s been stable,” explains farmer and president of Quebec Potato Producers, Francis Desrochers.
But PepsiCo should expect the price of its potatoes to jump soon, since producers will be asking for a 20% increase during the next negotiations which are imminent, and this, throughout North America. The cost of inputs, mainly pesticides, has skyrocketed, says Desrochers.
As for the price of the other main ingredient of potato chips, oil, it jumped sharply. The “edible fats and oils” category has increased by 21% over the past year, according to Statistics Canada.
Elsewhere in the world
The sometimes difficult relationships between suppliers and retailers are not unique to Quebec. In Europe, for example, the misunderstanding on prices between certain brands and those who supply the products caused the disappearance of Nutella or Lay’s crisps from certain stores, reported The Press Wednesday. In Great Britain, the Tesco brand no longer sells Colgate Palmolive products.
With the collaboration of Marie-Eve Fournier, The Press