Lawmakers should push grocery industry for transparency on profits, food analysts say

As members of Parliament gear up to grill the CEOs of Canada's largest grocery store chains, experts say elected officials should push for more transparency on why grocers are making so much money.

The CEOs and presidents of Loblaw Cos. Ltd., Metro Inc. and Empire Co. Ltd. — which operates chains including Sobeys, Safeway and FreshCo — are set to testify before the House of Commons agriculture committee on Wednesday as part of its study on food inflation.

Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, said the upcoming meeting "is very much about political theatre."

Other executives from the companies have already testified in front of MPs, but New Democrats in particular signalled their dissatisfaction with the absence of the CEOs themselves.

"Those at the heads of these companies, where the buck stops, should at least have to answer questions around why their profits are so high and why their prices are so high," NDP Leader Jagmeet Singh said last month.

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The proposal to hear from the industry leaders came from the party's agriculture critic, Alistair MacGregor, and it received unanimous support from Liberal, Conservative and Bloc Quebecois MPs on the committee.

With the grocers making record profits amid high inflation, Charlebois said MPs have an opportunity to push for more financial information that could shed light on what's been driving profits.

A report co-authored by Charlebois in the fall found the three grocers all posted higher profits in the first half of 2022 compared with their average performances over the last five years.

Loblaw was particularly notable, the report found, as it had outperformed not only its five-year average performance but also that of each of those years individually. The grocery chain's gross profit in the first half of 2022 beat its previous best results by $180 million — equivalent to about an extra million dollars a day, the research found.

And while Loblaw has said its profits have been driven by non-food items such as its pharmacy products, its financial statements don't break down the margins for different categories of goods.

"I think it'd be worthwhile for the committee to dig deeper into that data for all three companies," Charlebois said.

But the committee won't be able to compel the companies to release more information about their financial results, leaving the decision of what to disclose up to grocers.

David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, said the grocers may indeed be making their profits off of non-food products. But "we have no way to evaluate that because we can't see any of that segmented information," he said.