Dynamic pricing is here to stay, whether we like it or not

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Dynamic pricing is here to stay, whether we like it or not

It is reshaping the fast-food industry

Sylvain Charlebois, Troy Media

Dynamic pricing is reshaping the fast-food industry

Wendy’s recent revelation of its plans to implement time-based pricing at some of its U.S. outlets has sparked a flurry of discussions about dynamic pricing in the fast-food industry. While people perceived Wendy’s strategy as a public relations misstep, dynamic pricing is not a novel concept. It has a longstanding presence in various sectors, including the fast-food industry in Canada.

Dynamic pricing involves adjusting prices in response to fluctuating demand across the supply chain, including at consumer price points. Essentially, prices rise with increased demand and fall when demand wanes. This pricing mechanism has been a staple in commodity markets for ages.

With the advent of AI and the proliferation of chatbots like ChatGPT, it’s no surprise that companies are now more openly discussing their use of AI and its transformative impact on their operational strategies and consumer engagement.

However, the timing of Wendy’s announcement could not have been more inopportune. Amid growing concerns over escalating food prices, the admission of “surge pricing” practices was met with considerable backlash from consumers, leading to widespread calls for boycotts on social media platforms.

Given that Wendy’s competitors already employ dynamic pricing strategies, some may have viewed Wendy’s disclosure unfavourably. In a swift response, Burger King launched a “free burger” promotion, further intensifying the competitive dynamics in the fast-food sector.

The integration of AI into business operations suggests that the application of dynamic pricing is still in its infancy. From an economic standpoint, optimizing operations to minimize costs – encompassing a range of strategies, including efficient procurement practices, reducing food waste, and managing staffing to ensure that the right personnel – are deployed at the right time and place is crucial. These measures not only reduce wait times but also enable the fine-tuning of products to align with customer preferences.

Despite these potential benefits, the ethical contract between the industry and consumers remains unclear. Consumers have yet to grasp how dynamic pricing can work in their favour. It is anticipated that, over the coming years, applications will emerge to inform consumers about the optimal times to purchase their favourite products at the best possible prices.

Dynamic pricing has the potential to create a more vibrant and competitive marketplace, akin to a cat-and-mouse game. However, equipping consumers to navigate this new pricing landscape is an ongoing challenge, and for the time being, companies are likely to maintain a low profile regarding their pricing strategies.

The impact of dynamic pricing extends beyond the fast-food industry to the realm of food retailing. A notable example is the German supermarket chain METRO, which made headlines in 2023 for its dynamic pricing experiments. The chain has been utilizing smart packaging to monitor the expiration dates of fresh foods, allowing for price adjustments as products approach their expiration dates. This innovative approach mitigates food waste and provides consumers with greater flexibility in their purchasing decisions, offering clear benefits to both the retailer and the consumer.

As we look to the future, dynamic pricing models must place consumers at the forefront, ensuring that the benefits are not solely reaped by the industry. The goal should be to foster a more transparent and equitable marketplace where consumers are empowered with the knowledge and tools to make informed purchasing decisions.

In this regard, the food industry has a significant role to play in shaping the evolution of dynamic pricing, with a focus on enhancing consumer trust and satisfaction.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Millennials the new dominant force in the Canadian food industry

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Millennials the new dominant force in the Canadian food industry

Millennials’ values and preferences are driving changes in the food industry and shaping the future of food consumption

Sylvain Charlebois, Troy Media

Millennials now outnumber Boomers in our country, according to Statistics Canada. As of July 1, 2023, the millennial generation (born between 1981 and 1996) has surpassed the baby boomer generation (born between 1946 and 1965) in population size for the first time.

Boosted by immigration, Canada’s median age has dropped to 40.6 from 41.0 just two years ago. Consequently, Canada is more populous, younger, and no longer dominated by Boomers. Generation Z (born between 1997 and 2012) is expanding and has surpassed Generation X (born between 1966 and 1980) to become Canada’s third-largest generation, projected to become the largest within the next 30 years.

The implications of a growing and younger population for the food industry are multifaceted.

Millennials differ from other generations in their racial diversity, higher education levels, and technological literacy. They also face financial hardships later in life, unlike previous generations that typically encountered a challenging job market or an unforgiving economy at a younger age. Now at their economic prime, with some having families, Millennials are feeling the financial pinch from higher interest rates and rents. After a period of low unemployment and cheap money, this generation faces a severe financial reality check.

This shift is evident in their grocery shopping habits. Over 86 percent of Millennials are actively seeking discounts, and over 66 percent have switched primary grocery stores in the last 12 months to find better deals, both percentages being the highest of all generations. Additionally, 43 percent are using food-rescuing apps to buy expiring food at a discount, again the highest usage percentage of all generations. The economic and financial transition Millennials had to navigate has been drastic.

In the past, Millennials frequented specialty stores, preferring food options that were fresh, natural, eco-friendly, and clearly labelled. However, financial reality has led them to alter their priorities. Nonetheless, their core values remain intact, and as they become more economically influential, they will shape the food industry. Millennials’ inclination towards culturally diverse foods and frequent snacking continues to affect supermarkets and food service businesses. According to our latest survey, 28.3 percent of Millennials often substitute snacks for traditional meals, a sharp contrast to the mere 8.7 percent of Baby Boomers who do the same, with lunch being the most common meal replaced.

Interestingly, Millennials rely on friends and family as their primary source of information about food, unlike Boomers, who turn to health professionals. Millennials also pay close attention to food labels. Supported by social media, they have challenged the food industry, advocating for clean labelling, better sourcing of ingredients, and healthier options. Despite facing financial challenges, they will likely continue to influence the industry and rely on the growing Gen Z group to push for changes that benefit all.

As the food industry adapts to the evolving preferences of Millennials, it will also need to anticipate the emerging trends brought by Generation Z. Gen Z’s values, shaped by their digital-native upbringing and heightened social and environmental awareness, will further push the industry towards transparency, sustainability, and innovation.

For instance, Gen Z’s preference for alternative protein sources will likely accelerate the shift towards more sustainable food production. Their comfort with technology will also drive the adoption of online grocery shopping and food delivery services, which have already seen a surge during the pandemic and beyond.

Moreover, Gen Z’s emphasis on authenticity and experiences may lead to a rise in experiential dining, which refers to going beyond just eating and focusing on creating a memorable and immersive experience for the diner and unique food offerings. They are also more likely to support local and small-scale producers, aligning with their values of sustainability and community.

As Millennials continue to exert their influence on the food industry, the upcoming Gen Z cohort will bring its own set of preferences and values, further shaping the future of food. Understanding and adapting to these generational shifts will be crucial for businesses in the food sector to stay relevant and thrive in the years to come.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Grocery shoppers evolving into dedicated bargain hunters

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Grocery shoppers evolving into dedicated bargain hunters

Persistent food inflation has turned us into avid grocery discount seekers

Sylvain Charlebois, Troy Media

The grocery market in Canada has changed a lot. Grocery shoppers have evolved into dedicated bargain hunters, as revealed by a comprehensive survey conducted by Dalhousie University and Caddle. This survey delves into Canadian grocery shopping habits, highlighting a pronounced shift towards discount-driven consumerism, accentuated using technology to secure savings.

The findings provide nuanced insights into the changing landscape of grocery shopping, marked by a 32 percent increase in shopping frequency since 2018, a strong inclination towards discounts, and the strategic use of food-saving apps. The average Canadian now visits the grocery store 7.20 times a month, up from 5.43 in 2018, signifying a notable change in shopping behaviour.

In the face of economic uncertainties, 62.2 percent of consumers are willing to switch their primary grocery store for better deals, with 29.8 percent choosing stores based solely on discount offerings. This discernment extends to expiring products, where a 50 percent discount would entice 47.3 percent of shoppers, showcasing a solid preference for substantial savings.

The Loblaw 50 percent discount flip-flop earlier this year on expiring foods raised concerns for many. Discounts on expiring or clearance items captivate consumers, with 59.2 percent actively seeking such deals. The survey reveals that 57.9 percent of purchases are influenced by familiarity with the product, while 57.2 percent are swayed by the magnitude of the discount. Flyers, mobile apps, and in-store signage play pivotal roles in alerting consumers to these discounts, with fresh produce and meat products topping the list of most-purchased discounted items. Consumers expect to be incentivized when buying expiring food at the grocery store, with 50 percent being the preferred benchmark for interest.

The survey also highlights the growing use of food-saving apps, such as FlashFood, Food Hero, and Too Good To Go. Despite a 57.6 percent non-use rate, these apps have garnered overwhelming approval from current users, with 95.1 percent recommending them. They cater to the desire to save money, with 73.2 percent citing it as a primary motivation, and contribute to waste reduction, an important consideration for 39.5 percent of users. Among app users, preferences for discounted items diverge from in-store choices, favouring baked goods, fresh produce, meat, and ready-to-eat items, indicating a distinct market for app-based food rescuing.

Saving food through apps is slowly gaining popularity, but the process still needs refinement. Buying expiring foods online means purchasing based on a picture or a mystery bag filled with potentially unwanted items. Over time, the interface of these apps will need to evolve to become more attractive to consumers who are still unsure.

Interestingly, Canadians view Loblaw, Walmart, Costco, Metro, and Giant Tiger, in that order, as grocers offering substantial discounts. Surprisingly, Sobeys, the second-largest grocer, did not make the top five in the survey.

Given these findings, grocery retailers need to adapt by emphasizing percentage discounts and loyalty rewards, enhancing promotion visibility through varied channels, and forging proactive partnerships with food-saving apps. Such strategies aim to align with consumer preferences for savings and sustainability, potentially boosting customer loyalty and market share in a competitive industry.

The modern grocery landscape is marked by a robust appetite for discounts, shaping consumer behaviours and store preferences. The burgeoning popularity of food-saving apps underscores a shifting consumer mindset towards sustainable and cost-effective grocery shopping practices.

In essence, the survey offers a rigorous look into the preferences and behaviours shaping the future of grocery shopping in Canada. Sustained higher food inflation has programmed us to be discount seekers, which may last a while. As the industry grapples with these trends, the strategic integration of discounts and technology emerges as a key avenue for retailers to meet evolving consumer demands while fostering sustainability.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Why all political parties agree that the grocer code of conduct is necessary

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Why all political parties agree that the grocer code of conduct is necessary

The grocer code of conduct promises greater transparency and stability in the Canadian food market

Sylvain Charlebois, Troy Media

In an effort to tackle high food prices, the Parliamentary Committee on Agriculture in Ottawa recently sent a letter to both Loblaw and Walmart, urging both retailers to voluntarily comply with the proposed grocer’s code of conduct or risk facing legislative action.

This move signals Canada’s potential shift towards a mandatory, industry-led code overseen by the government, a significant step that promises benefits for Canadians, though its importance may not yet be widely recognized.

The remarkable consensus across political parties highlights the grocery code of conduct as a key instrument for gradually stabilizing food prices. This code seeks to furnish food companies with a safe harbour for dispute resolution through a designated secretariat, offering an alternative to the current norm where companies have no recourse but to endure unfavourable conditions.

The code aims not to control prices but to guarantee equitable contract practices for all parties, including startups, farmers, and small family-run food processors, thus providing suppliers with essential financial stability. The industry, plagued by unilateral decisions and broken agreements by grocers, stands to gain from the equitable playing field this code promises.

The code’s introduction might seem paradoxical to staunch free-market advocates and conservatives who typically view government intervention with skepticism. Companies like Walmart and Loblaw, having achieved their market dominance through strategic decisions, are often celebrated for their success. However, the issue at hand transcends their accomplishments.

The food industry is distinct for two primary reasons:

            •           It operates on razor-thin margins across the entire supply chain, necessitating meticulous planning and coordination.

            •           The power dynamics are skewed, with suppliers needing to pay substantial fees to grocers for the privilege of doing business with them.

This situation has granted grocers considerable gatekeeping authority, allowing them to shape the market to their advantage. It doesn’t work that way in other sectors.

This dominance not only stifles competition but has also marginalized independent grocers, particularly affecting Canadians in smaller towns by limiting their access to nearby stores. The upward trend in grocery fees (payments made by suppliers to many retailers in exchange for stocking products on shelves), primarily driven by Loblaw and Walmart, exacerbates the challenges for suppliers and independent grocers alike.

It’s crucial to understand that the code’s goal is not to reduce prices – such expectations would be fanciful – but to mitigate price volatility, a pervasive issue that overshadows the more fundamental problem of food inflation. While higher prices are concerning, it’s important to recognize food inflation as a normal economic phenomenon, essential for businesses to thrive and ensure the safety of food products. Achieving a food inflation rate of 1.5 percent to 2.5 percent – a range last seen in the summer of 2021 and anticipated to return by year’s end according to Canada’s Food Price Report forecast – is ideal.

Price volatility, exacerbated by increased grocery fees and the manipulation of prices around blackout periods, remains a significant concern if the aim is to reduce price volatility. Although the code of conduct may not eliminate these practices, it is poised to significantly decrease their impact on retail food prices.

Moreover, the code of conduct promises greater transparency within the food chain. An annual report by the secretariat detailing compliant companies and highlighting those failing to adhere introduces an unprecedented level of accountability in Canada’s food industry.

While the grocer’s code of conduct may initially seem counterintuitive to some, its benefits for consumers, suppliers, and the overall market cannot be overstated. It represents a step towards a more equitable and stable food industry in Canada.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Not all freezes on food prices benefit consumers

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Not all freezes on food prices benefit consumers

Some could be deemed anti-competitive and might result in food price collusion among rivals

Sylvain Charlebois, Troy Media

Consumers often assume that price freezes are always in their favour. However, it’s important to recognize that not all price freezes are equal, especially when it comes to products further up the supply chain. Every year, between Nov. 1 and Feb. 1, grocers request suppliers not to increase prices for undisclosed reasons.

This unspoken agreement between grocers and suppliers, which likely started decades ago, may not ultimately benefit consumers. In October, as suppliers renegotiate contracts with grocers, prices are often adjusted, and many increase just before the three-month price freeze.

Now that the “blackout” period has ended, we should anticipate food prices rising again, as even Metro CEO Eric Laflèche himself warned consumers during his recent earnings call. Price hikes are likely to affect non-perishable products, primarily those in the centre of the store.

While high food inflation is certainly a concern for consumers, price volatility can be even more detrimental, and that’s exactly what these blackout periods bring to the market. Sudden spikes in food prices can surprise consumers and force them to temporarily abandon certain food categories, often including healthier options, leading to nutritional compromises. Once consumers perceive a food category as financially out of reach, it takes them a while to return.

In his efforts to stabilize food prices in Canada, françois-Philippe Champagne, the Minister of Innovation and Technology, should be aware of these blackout periods and target them as market-distorting mechanisms that ultimately harm consumers.

According to Statistics Canada, over the last 15 years, some of the highest month-to-month food price increases have occurred either in November or February. The highest month-to-month food price increase was in November 2008 at 2.5 percent, followed by February 2011 at 2.2 percent. Statistics Canada also recorded above-average month-to-month food price increases in November 2016 (1.6 percent) and November 2022 (1.7 percent). Despite the seasonality factor, blackout periods don’t shield budget-strapped consumers, as evidenced by increases in January 2016, January 2022, January 2020, and December 2018.

Coincidentally, these three months, January, February, and November, have experienced the highest month-to-month food price increases in the last 30 years, except for May. But we’ll get to that later.

The excuse often cited is that grocers don’t have time to deal with price changes during the busy holiday season. However, this argument may have been valid years ago when grocers manually updated prices on every item. Today, many prices are digital and displayed electronically, raising questions about the need for such blackout periods.

More fundamentally, since these blackout periods are industry-wide, one could argue that this practice could be considered anti-competitive and may lead to price co-ordination among competitors. Although we still don’t know the precise reasons behind past price-fixing scandals, blackout periods may indicate a broader culture of price-fixing in the industry, to the detriment of consumers.

This issue goes beyond blackout periods. Recently, Loblaw informed its suppliers that their fees will increase once again. In the agri-food sector, suppliers must pay grocers to do business with them. Distribution centre charges will rise from 1.17 percent to 1.22 percent, and direct-to-store delivery (DSD) charges will increase from 0.36 percent to 0.38 percent. While these may seem like minor changes to most of us, they can amount to millions of dollars for suppliers.

These yearly unilateral increases, imposed by Loblaw, will take effect on Apr. 28 without any dialogue or negotiation. While major multinationals like PepsiCo, Mondelez, Lactalis, Kraft-Heinz, and Kellogg may adjust their prices to offset higher fees from grocers, many smaller Canadian food manufacturers may struggle financially and even exit the industry. This results in higher prices and reduced competition, which is counterproductive for consumers.

Once again, by coincidence, May, the one month when we typically anticipate price hikes due to conflicts in the food supply chain, experienced the second-highest month-to-month average increase in the last 30 years.

To address these issues, we need more discipline and oversight, including the implementation of a mandatory code of conduct to ensure fair practices in the industry.

It’s time to put an end to this insanity.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Let’s pause before we OK the killing of the mentally ill

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Let’s pause before we OK the killing of the mentally ill

Expanding MAiD to the mentally ill takes on a slippery slope of politicians using it as a way to cut healthcare costs

Doug Firby, Troy Media

A close friend of mine died a few days ago. Her painful end came three years after her husband died of complications related to COVID.

Losing him drove Sheila into a pit of despair so deep she couldn’t crawl out. While I and one of her sisters tried to lift her up with empathy and words of encouragement from afar – we both live in the West, and Sheila was in Ontario – she descended into the darkest of places. Lonely days of endless grieving were blotted out with alcohol and self-starvation.

By the time she was admitted to hospital with a ruptured gall bladder, her 80-pound frame was too fragile to survive the trauma of emergency surgery. She got her heart-breaking wish to be reunited with her life partner.

Sheila’s ordeal and her steadfast decision to slowly take her own life made me reflect on the fraught debate over when, or perhaps even whether, to expand the mandate of MAiD, or medical assistance in dying. A simpler and older term for this is euthanasia. The ethical issues in this debate are agonizing and complex, and will profoundly affect the national consensus on when it is right to help someone bring about their own end.

For those reasons, I welcome the federal government’s decision to pause for three years the planned access to MAiD for individuals whose sole underlying condition is mental illness. The expansion was to come into effect in March, but most provinces, much of the medical community, and even the Canadian Mental Health Association warned they simply were not ready to implement this radical shift in health care.

The extension, the second one so far, will allow for a committee of MPs and senators to reconvene in two years to assess the state of readiness for the extension of MAiD. And there is good reason for the pause. At the moment, there are no finalized national standards to determine whether a mentally ill person might qualify for MAiD, and no transparent review process is in place.

Some critics, including Dying with Dignity Canada and three senators, see a further delay as an issue that affects constitutional rights. Senator Pamela Wallin said it appears the government no longer subscribes to “the notion of choice and how important it is.”

But put yourself in the position of the medical experts who will be asked to decide whether someone is too mentally ill to continue living. It is clearly at odds with their bio-ethical training to “first, do no harm.”

Decisions involving people who have incurable physical diseases that are certain to bring about painful deaths, such as cancer, are relatively straightforward. It is indeed compassionate to allow those individuals to make a peaceful exit while they are of sound mind and can surround themselves with loved ones.

MAiD essentially improved on a practice that has been going on for many years. Physicians have for decades administered a powerful brew of painkillers to terminal patients in their final hours that they know will bring about their deaths. It is known as the Brompton cocktail, and it has been allowed because doctors are technically just treating the pain symptoms.

The big difference between the cocktail treatment and MAiD is that, invariably, the Brompton cocktail is employed only when death is imminent.

Decisions involving people with incurable and severe mental illness are more difficult to assess. A physician must somehow find objective evidence that the patient’s illness will produce “intolerable suffering,” and that there are no viable treatment options to relieve that suffering. As many critics of expanded MAiD point out, would such suffering be inevitable if the treatment of mental illness was better funded?

There’s another important consideration, however. As anyone who has tried to support a suicidal person knows, a person who is set on ending their own life will find a way to make it happen. Often, as with Sheila, it will be slow and painful. Canadian author Miriam Toews brilliantly described the futility of trying to save a loved one bent on her own destruction in her novel All My Puny Sorrows.

I frankly don’t know whether Sheila could have been saved with better mental health support. What I do know is that her friends had not given up on hoping she could find a reason to live right up until the moment her heart stopped. For that reason, I would never want to see someone in circumstances like hers have access to MAiD.

Of course, there is another worry about state-sanctioned euthanasia that has always made me uneasy. And it is that it can become a cost-saving convenience for governments looking to save taxpayer dollars. We introduced MAiD as an act of compassion for terminal patients but there are dark forces that will eventually realize there is a strong business case to see it expanded. Think of the thousands of dollars per patient that can be saved! It is a slippery slope.

As the country wrestles with the complex ethical issues that arise from MAiD for the mentally ill, three years will go by in a flash. It is a debate that all Canadians would do well to be engaged in.

Doug Firby is an award-winning editorial writer with over four decades of experience working for newspapers, magazines and online publications in Ontario and western Canada. Previously, he served as Editorial Page Editor at the Calgary Herald.

Cutting the Saskatchewan gas tax is a no-brainer

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Cutting the Saskatchewan gas tax is a no-brainer

Cutting the gas tax will provide immediate relief to the people of Saskatchewan

Gage Haubrich, Troy Media

Saskatchewan is a land of long commutes and even longer road trips.

Farmers drive into small towns from their farms to pick up parts, and people who live in those small towns commute to the city for work. Then, on the weekend, everyone packs up their vehicles to trek across the province to fish, visit family or catch a game at Taylor Field in Regina.

You’d be hard-pressed to find a place that drives more than Saskatchewan. It’s a necessity; you can’t take a train from Regina to Prince Albert for a meeting. You must get in your car and hit the highway.

And with all that driving comes a hefty fuel bill.

Recently, the Saskatchewan NDP renewed its call for the provincial government to cut its 15-cent per litre tax on gasoline and diesel. NDP leader Carla Beck said: “Premier (Scott) Moe has the power to act today and suspend the gas tax … People are breaking the bank just to fill the tank.”

Cutting the gas tax is a no-brainer. The government can act on it quickly and save Saskatchewanians money instantly.

Unlike sending cheques, as the government did in 2022, or any other complicated affordability measure, a gas tax cut has no bureaucracy behind it. The government can just stop collecting the tax and Saskatchewan drivers can start saving.

The provincial government currently charges 15 cents per litre on both gas and diesel. A two-car family, with a minivan and a lighter duty pickup, would be saving $11 and $15 respectively every time they fill up. If that family fills up those vehicles once every two weeks, they would be saving more than $600 a year. That’s a monthly payment on one of those vehicles or a couple of trips to the grocery store.

In response to the NDP, the government says the roughly half a billion the government rakes in from the fuel tax is used to pay for government services.

Is that really what the money is spent on? According to the Fraser Institute, the government also spends an average of $869 million a year on corporate welfare, and that’s the most per person of any province.

Instead of taking money out of the wallets of Saskatchewan taxpayers at the gas station to give to corporations, the government should axe all its corporate welfare. That would be enough money to fully cut the gas tax, with a couple hundred million dollars left over.

The government then goes on to say the federal carbon tax is the real cause of unaffordability, citing its recent move to help by stopping the collection of the carbon tax on home heating in the province.

But the federal carbon tax is also one of the reasons why the government should move on this now. Even though Saskatchewanians aren’t paying the carbon tax on their heating bills this month, the carbon tax on fuel isn’t going anywhere fast.

Currently the carbon tax costs 14 cents per litre of gasoline, but come April, that cost jumps to 17 cents per litre. By 2030, it will be 37 cents per litre and cost the average Saskatchewan household $1,723 per year, according to the Parliamentary Budget Officer. And that’s including the rebates.

Premier Moe knows how much the federal carbon tax hurts the province. He has been fighting it longer than anyone else in the country, first as provincial environment minister and now as premier.

The move to stop collecting carbon tax on natural gas for home heating put up a shield for Saskatchewan residents against the carbon tax. But the government should go further and cut the provincial fuel tax to put up a wall.

If the government wants to continue to fight the carbon tax, it needs to keep taking action; it can’t rest on past achievements. The government needs to cut the gas tax and get Saskatchewanians some relief at the pumps.

Gage Haubrich is the Prairie Director for the Canadian Taxpayers Federation.

Loblaw decision to maintain 50 percent discount on expiring food a win for consumers

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Loblaw decision to maintain 50 percent discount on expiring food a win for consumers

by Sylvain Charlebois

It all started with an email from Loblaw last week announcing its plan to reduce the discount on soon-to-expire fresh food items. They intended to lower the discount from 50 percent to 30 percent in stores where the previous discount policy was still in place.

This adjustment was scheduled to be rolled out gradually over several weeks across the country, impacting a range of Loblaw’s store banners, including Zehrs, Loblaw, Provigo, and Atlantic Superstores.

It’s worth noting that many other stores had already abandoned this practice years ago. However, the timing of this decision, in January 2024, when many consumers are grappling with financial challenges, did not sit well with Canadians. Not one bit.

Fortunately, Loblaw eventually reconsidered its decision and opted – in the face of the concerns voiced by the public – to maintain the 50 percent discount on expiring food items. It’s not the first time Loblaw has reversed a decision in response to public sentiment.

In 2016, Loblaw reversed its decision to stop carrying French’s products after facing a significant public backlash, famously known as the “Ketchup Wars.” During that time, consumers boycotted the stores, driven by a sense of patriotism and a desire to support tomato farmers in Leamington, whose Heinz plant had recently been saved by a contract with French’s – a major competitor to Heinz – to produce tomato paste. Loblaw saw its sales plummet within days.

This time around, however, the public outcry was driven by sheer desperation.

While some called for a boycott in response to Loblaw’s discount decision, the company’s rationale for the change prompted many to reconsider. Loblaw argued that it was aligning its discounting policy with competitors, a common industry practice. However, the concern was that consumers would now see similar discounts everywhere, with 30 percent becoming the new benchmark. Some politicians even called on the Competition Bureau to investigate the matter.

Another peculiar aspect of Loblaw’s strategy this time was its decision not to engage with reporters. Instead, the news of the policy change came from Dalhousie’s Agri-Food Analytics Lab, which received confirmation from Loblaw about the adjustments to its discounting approach. This lack of communication raised questions about corporate transparency, a crucial element of corporate compassion.

Loblaw may be hesitant to communicate with the public due to the widespread negative sentiment towards the leading grocery chain. However, why the company would make such a decision remains incomprehensible, especially now.

Discounting expiring products has traditionally been a win-win situation for consumers and retailers. Consumers save money, while grocers reduce food waste at the retail level – a straightforward benefit for all. The policy can lead to significant savings for consumers, with the 20 percent difference between a 50 percent and a 30 percent discount translating to $10 on a $50 piece of meat, a common scenario in today’s market.

Before the change, Loblaw had planned to encourage its customers to use the FlashFood app, which had recently been revamped and saw a triple increase in downloads this week after Loblaw’s decision became public, according to the company. Food-rescuing apps like FlashFood, FoodHero, and Too Good To Go are valuable for those looking to save money, but they lack the tactile experience of inspecting expiring products in a physical store. Many consumers prefer the advantage of personally assessing expiring food items in-store before making a purchase.

It’s never too late to do the right thing, and Loblaw eventually showed its compassion by reversing its initial decision. Most Canadians can appreciate that retailers have the flexibility to adjust their discounting policies to stay competitive.

However, this decision had the potential to generate a significant public relations crisis, as it touched upon issues of food affordability, food waste, and Loblaw’s reputation. And it did. The initial decision itself was flawed, and the timing couldn’t have been worse. Thankfully, the company ultimately made the right choice for all of us.

Now, if we can encourage other grocers to follow Loblaw’s lead by offering a 50 percent discount on expiring food items, that would truly be a welcome development.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

Government overspending is literally killing our country

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Government overspending is literally killing our country

Canada’s debt exceeds $1.2 trillion, or nearly $31,000 for every person in the country

Doug Firby, Troy Media

New Year’s and hangovers go together like rum and eggnog. Some hangovers can be eased with a fistful of Tylenol and rehydration. Others, however, linger on, causing long-term damage to our future health.

Such is the crapulence imposed on us by our recklessly free-spending federal government. The hangover from ill-considered mission creep has set poor Canadian working stiffs on course for choking tax increases and an underperforming economy in what should be one of the most prosperous countries in the world.

The alarm a lot of people feel when they step on the scales in January drives them into action – the familiar quest to cut back on the things that have made us too fat. (Sadly, I include myself in this cohort.) Yet, federal politicians don’t seem to share such alarm; they just keep packing on the fiscal pounds.

Numbers can be numbing, so I’ll try not to overwhelm you. But a few figures are necessary to illustrate just how big the problem is.

The federal government’s current debt is more than $1.2 trillion, or nearly $31,000 for every person in the country, according to debt.ca. If you’re counting, that number has 12 zeros and it’s bigger than the 2023 Gross Domestic Product of Saudi Arabia.

The amount we owe is scary enough, but even more alarming is the rate of debt growth. The federal government alone is adding $878 of new debt every second, or nearly $110 million of new debt every day.

Don’t forget each province is racking up its own debt as well. Alberta, so proudly “debt free” just 20 years ago, now carries a debt of $78.5 billion. You can check your own province’s debt status at the Canadian Taxpayer’s Federation website. Click Provincial Debt Clocks in the top right-hand corner and scroll down to your province.

A lot of factors have conspired together to create this growing crisis. The Trudeau government spent like drunken sailors during the COVID-19 pandemic with the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Response Benefit (CERB), supposedly to help small businesses avoid bankruptcy. Such support was well-advised, but the level of waste and general lack of accountability around the handouts was simply criminal.

The Fraser Institute estimates that of the $359.7 billion of the federal government’s COVID spending, 25 percent ($89.9 billion) was wasted. Total federal COVID spending has added $8.3 billion to present-day interest costs.

There are many harmful effects to carrying a massive debt. For one, the government spends huge amounts of money each year just on interest charges. That is money that could have been spent on other priorities. (The $34.7 billion the feds spent on debt servicing charges in 2022/23 is more than it spends on child-care benefits. See the cause/effect?)

There is also no money left to spend on areas where we are vulnerable. In 2013, for example, Canada promised NATO it would work toward military spending equal to two percent of GDP. Yet, last year, the budget for the Canadian military was $36.7 billion or just 1.29 percent of GDP. This is happening at a time when international threats are increasing. We have, in effect, given up on having the capacity to defend ourselves.

As the minority federal Liberal government kowtows to the NDP in an effort to cling to power, it keeps agreeing to new spending on social programs that will – quite regrettably – be financed through more borrowing. Do you see where this is heading?

Meanwhile, the feds are adding costs in areas where they don’t really get any political points. The Public Service Commission of Canada recently reported that federal public service reached a record size in 2023. The 274,219 employees at the end of the March 31, 2023, fiscal year, as defined by the Public Service Employment Act, is 40.4 percent higher than in 2014-15, when the Liberals regained power under Justin Trudeau.

The Treasury Board of Canada Secretariat puts the figure even higher by including departments and agencies not included in the PSC count. It puts the total at 357,247 people.

It’s important to be clear about where this debt train is headed. As debt grows, our currency devalues. We become less competitive on the world stage. Ultimately, we lose jobs and our standard of living slips into a death spiral.

Canadians seem to have a disconnect between how they feel about debt and what they do. A July 2023 survey conducted by Ipsos for the Montreal Economic Institute, for example, found that Canadians are generally dissatisfied with the federal government’s management of public spending and nearly two-thirds think the government is “not doing a good job at allocating funds to the most important issues facing Canada today.” Amen to that. More than 55 percent of Canadians believe government spending is too high, while just 27 percent believe it’s acceptable, according to the survey.

And yet, even as Canadians say they are concerned about government debt, they are piling on personal debt, according to a report from TransUnion. Canadian consumer debt hit an all-time high of $2.32 trillion in the first quarter of 2023.

Now, barring a bolt of lightning from the Heavens, the Liberal regime is a dead government walking. Canadians, exasperated with Prime Minister Justin Trudeau’s incessantly hollow blather, are turning toward the federal Conservative Party despite its snivelling and singularly unlikeable leader, Pierre Poilievre. Part of the appeal is the promise to reduce the deficit by cutting government spending while encouraging growth by eliminating red tape. (No mention of the pain such cuts will inflict.)

We may not have any other choice. Eventually, a government that can never say no to ever-expanding social programs simply collapses upon itself, bringing catastrophic consequences for its people and draconian measures to restore order.

Reducing spending without gutting services is a multi-year project that needs to be implemented thoughtfully. It starts with reducing the size of government and attacking a culture that seems to encourage waste. Let’s not be naïve, however; slaying the debt dragon will also inevitably lead to some hard decisions about programs we may have to live without.

You don’t have to wait for a change in government to see change. If there’s one thing we know about politicians, it’s that they read polls and respond to letter campaigns. If you demand action, you can expect some response – although perhaps not as forceful a change as we’d see with a new party in power.

Now, like a lot of you out there, I am a pretty typical Canadian. I am fiscally conservative and socially progressive. (As I wrote this, I had the disturbing realization that Alberta Premier Danielle Smith describes herself the same way.) I buy my coffee from Tim’s, not Starbucks. I look for bargains at Canadian Tire. I raise my eyebrows at the taxes I pay, but I never try to dodge my share. I embrace our flawed but communitarian public health care system. I believe in all for one and one for all.

And, like many of you, I believe we are a great society because we aren’t afraid to use public money to help people who need it. If there is one thing that distinguishes us from our polarized neighbours to the south, this is it.

One day, however, our capacity to share our prosperity with those in need will run out if we can’t get our spending back to sustainable levels. The debt train will take us off the rails unless we act decisively to slow it down.

Stop being a spectator. Get involved.

Doug Firby is an award-winning editorial writer with over four decades of experience working for newspapers, magazines and online publications in Ontario and western Canada. Previously, he served as Editorial Page Editor at the Calgary Herald.

Top 10 food news stories of 2023

Daily Herald Contributor
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Top 10 food news stories of 2023

From farmland protection scandals to gene editing and milk dumping, here’s what made headlines in the food industry this year

Sylvain Charlebois, Troy Media

As we approach the end of 2023, it’s always interesting to reflect on the year that was. Selecting the top story from our list of the year’s top 10 food news stories presented a challenge, primarily due to the pervasive coverage of food inflation, which made headlines for both favourable and less favourable reasons.

Given the overarching theme of rising food prices, this list is composed of stories linked to or triggered by these price increases. Furthermore, while issues related to weather and climate change remained paramount, I opted not to incorporate them into this year’s top 10, as they exert a substantial and enduring impact on the agri-food industry year after year.

Here are this year’s top food news stories:

10) The Greenbelt scandal

In 2023, farmland protection became a headline across the country for the first time in many years. The Ford government was accused of allowing private developers to influence the Ontario government’s decision to allow some protected land to be used for new housing districts. After several investigations and a few cabinet ministers’ resignations, the Ford government reversed its plan to open the protected Greenbelt lands for housing development and committed to no further changes to the Greenbelt in the future. It was fascinating to see farmland management take the forefront this year, emerging as a significant political issue in Canada’s largest province.

9) Grocer code of conduct announced

It was both surprising and refreshing to witness the prominence of the code of conduct, a rather unsexy topic, making repeated headlines this year. Federal Minister of Innovation, Science, and Industry François-Philippe Champagne championed Ottawa’s efforts to achieve greater stability in food prices this year, ultimately determining that a code of conduct for grocers is the most effective solution to enhance competition within Canada’s food retail and manufacturing sectors. The implementation of such a code was announced this year. The United Kingdom, Ireland, and Australia already have similar codes that have proven to stabilize food retail prices and provide more variety for consumers.

While there is widespread consensus on the necessity of a code of conduct in Canada, the debate persists regarding whether it should be mandatory. Both Loblaw and Walmart Canada object to a compulsory code, and some argue that, without universal participation, the code will be ineffective.

8) Milk dumping viral video and baby formula shortages

A video of an exasperated Canadian dairy farmer, Jerry Huigen, went viral this year. For perhaps the first time in Canadian history, a Canadian dairy farmer was filmed discarding milk on his farm. The video garnered millions of views and shocked many Canadians, who questioned why such wastage occurred when food prices were soaring in grocery stores. Some reports suggested that millions of litres of milk are dumped every year, but the Dairy Farmers of Canada have consistently denied the issue, labelling Huigen’s video as an isolated incident.

Meanwhile, Canada continued to experience baby formula shortages throughout the year, leaving many parents puzzled about the scarcity of products when milk dumping seemed to be a recurring problem. To add to the confusion, Ontario-based Canada Royal Milk, a Chinese-owned dairy processing plant, is Canada’s sole baby formula plant, yet little is known about its operations.

7) Gene editing approved in Canada

Ottawa’s environmental approval of gene editing is possibly the most significant news in Canadian agriculture this year. Gene editing in food refers to the use of techniques such as CRISPR to modify the DNA of plants, animals, or microorganisms used in food production. Unlike GMOs, which involve inserting foreign genetic material from a different species into an organism’s genome, gene editing allows scientists to make specific changes to an organism’s genome, potentially improving its nutritional value, disease resistance, or other desirable traits. Gene editing will create crops that are more resilient to pests, diseases, and environmental stresses, and can enhance their flavour, appearance, or shelf life.

Gene editing is expected to play a crucial role in helping agriculture and farmers adapt to climate change.

6) Lab-grown meat approved in the U.S.

A significant milestone has been achieved in the cultured meat industry, with the United States Department of Agriculture (USDA) granting regulatory approval to GOOD Meat and UPSIDE Foods for the commercial distribution of their cultivated chicken products within the country. The U.S. has become the second country this year to permit the commercialization of cultivated meat. Cultivated meat, also known as cultured meat, refers to meat-based products produced from animal cells cultured in a laboratory, offering a potential solution to the environmental and ethical challenges associated with traditional meat consumption.

In Canada, the regulatory framework is more complex, primarily due to the supply management regime governing the production of dairy, poultry, and eggs. Canada is expected to lag in cultivated meat regulatory approvals, but this year’s U.S. approval has added more pressure.

5) Record-breaking fine in bread pricing scandal

For the first time in nearly six years, there has been significant progress in the investigation of price-fixing within the bread market, which was launched back in 2015. Canada Bread, currently owned by Mexico-based Grupo Bimbo, acknowledged its culpability in two distinct incidents of price-fixing in 2007 and 2011, even though Canada Bread was owned by Maple Leaf Foods at the time.

Consequently, the Mexican group agreed to pay a fine of $50 million, marking the highest penalty ever imposed in Canada for price-fixing. Loblaws and Weston Bakeries had previously confessed to their involvement in the bread scandal: Loblaws extended an apology to all Canadians in the form of a $25 gift card in 2017 without being required to pay a fine. As of this year, four companies are still under investigation, even after eight years: Sobeys, Metro, Walmart Canada, and Giant Tiger.

4) Shrinkflation and skimpflation

Consumers were not only concerned about higher food prices but also annoyed by the food industry’s tactics to maintain prices while reducing quantities or changing ingredients. Shrinkflation occurs when food manufacturers and restaurants reduce quantities without lowering prices. Canada’s famous Kraft Mac and Cheese was the most well-known case this year, which upset many consumers. Skimpflation involves manufacturers changing product ingredients to cut costs, often replacing chocolate and cheese with artificial ingredients.

While the number of shrinkflation cases is expected to decrease due to lower commodity prices in 2024, more skimpflation cases are anticipated due to front-of-package labelling rules set to be introduced in Canada in 2026.

3) High-profile strikes in the food industry

When a labour dispute occurs in the food industry, it doesn’t take long to impact consumers. Windsor Salt, Sobeys, Metro, Olymel, The Rogers Sugar plant in Vancouver, the St. Lawrence Seaway, British Columbia Ports, and Agropur were affected by labour disputes. Although the number of work stoppages in Canada was not as high as in previous years, many strikes this year had longer durations, according to Economic and Social Development Canada.

After years of decline, organized labour seems to have gained more political capital and used it to its advantage this year. Interestingly, there was an increase in members rejecting tentative agreements, indicating that workers wanted their voices heard.

2) Competing necessities of life: shelter and food

Something unusual occurred this year, particularly between April and September. Despite higher food prices, Canadians were spending less on food than the previous year. The average Canadian spent about two to four percent less on food for a significant portion of 2023, surprising many. Canadians traded down on food because trading down on shelter was much more challenging. The Bank of Canada raised its benchmark interest rate 10 times in a row, catching many Canadian households off guard and forcing them to allocate more funds to housing costs.

While food prices presented a challenge, housing costs likely compelled many to make unwanted nutritional compromises this year.

1) The profiteering blame-game

Throughout the year, Canadians found themselves puzzled by the ongoing blame game. Some politicians, interest groups, and experts repeatedly used allegations of profiteering as a diversion from more substantial economic issues such as interprovincial barriers, carbon pricing, and Bill C-234. Despite statements from the Bank of Canada, the Competition Bureau of Canada, Dalhousie University, and even the Parliamentary Committee asserting no evidence of profiteering, many Canadians remained unconvinced.

The politicization of food inflation in Canada this year was marked by intense debates, often tainted by personal attacks and accusations of bias from various sides. In contrast, within the industry, food manufacturers and grocers blamed each other for higher food prices. This profiteering narrative is likely the biggest non-scandal of the year, exacerbating the plight of Canadians.

There you have it. My top 10 food stories for 2023.

Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

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