Agriculture Committee on Dec. 7th, 2023

[Galen G. Weston]

I can't speak to that.

I think everybody has an opportunity to be more efficient and to look for ways to do that. Certainly in our case we're trying to lower prices and reduce the amount of energy we consume in the enterprise.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Epp.

Thank you, Mr. Weston.

You will still have five more minutes, so you can continue that line of questioning if you'd like.

Mr. Carr, it's over to you for five minutes.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Thanks, Mr. Chair.

Thank you very much, Mr. Weston.

As much as possible, if you could try to answer with a yes-or-no mindset, that would be greatly appreciated.

First, do you believe that if you sign a grocery code of conduct your personal profit margin will decrease, yes or no?

[Galen G. Weston]

I don't know.

Our focus has been entirely on whether this is going to improve the cost of groceries or is likely to increase the cost of groceries. I think you understand how we see it.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Are you concerned that your personal profit margin may decrease if a code of conduct is signed?

[Galen G. Weston]

No.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

I note, in the financials from Loblaw that were made public recently, that $1.3 billion on stock buybacks occurred. Now, it's well known that stock buybacks are one way in which investors and executives have the ability to drive up their own shares and the value of those shares.

Do you believe it would be reasonable, therefore, with the profits that you and your colleagues have generated by virtue of stock buybacks, to pass those savings on to consumers? Do you believe, as per Mr. MacGregor's question, that your personal profit margin continuing to increase is simply “reasonable”—as you said—or justified within the context of your overall profit?

[Galen G. Weston]

Thank you for the question.

Loblaw reinvests over 100% of its earnings back into this country in capital, with new stores and infrastructure. The jobs are not capital. When we look at it, we are investing substantially more back into the country than we are taking out. That's a good benchmark for whether our capital allocation strategy is balanced or imbalanced. We will continue to invest more in this country, because we see significant opportunity here for us to do so.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Do you believe that the expectations that Canadians have placed on you are unfair? According to a poll released by Abacus this morning, roughly 75% of Canadians are supportive of a code of conduct.

I'll repeat the question. Do you believe that the expectations that 75% of Canadians have for you are unfair?

[Galen G. Weston]

I think the expectation that Canadians have for us and for the value chain in food collectively is to find ways to lower food prices. I think that's an entirely reasonable expectation.

Our only concern with the code of conduct is that the way it's currently drafted creates a risk of the opposite happening. That is something I think everybody should be very concerned about.

All we're asking for is a really good, honest look at this. That's why we provided the material to this committee today, so that you would have it in front of you and you could look at it yourselves and understand that what we're saying is true—that it is a reasonable risk. We will sign a code that doesn't raise the cost of groceries for consumers.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

You said earlier in your opening remarks, or perhaps it was in response to one of the primary questions at the beginning, that the deal was one-sided with the way in which the current grocery code of conduct is presented. How could it be characterized as one-sided if three of your main competitors believe they are in a position to move forward with it as it is?

[Galen G. Weston]

The way the code is drafted, under section 2.5, manufacturers are not required to enter into written agreements with retailers that set out the commercial terms of their relationship. They don't have to do that. Despite this, we do. We have to enter into a contract, which is this code of conduct. That is, in itself, one-sided and imbalanced.

These are the kinds of things we want this code to adjust for. Everybody should be required to enter into an agreement and should be held accountable for the terms of that agreement. How can you write a contract that way?

[Ben Carr, Liberal, Winnipeg South Centre, MB]

That's satisfactory. I'd like to get one more question in, please.

Can you speak to the role that climate change is playing in the cost of food, specifically when there are floods, droughts and other changes that are apparent in the climate? How is that impacting the cost of groceries and, therefore, what you believe you have to pass on to consumers as a result?

[The Chair, Liberal, Kody Blois]

We are at the time, Mr. Weston. If you want to answer, make it very quick. If not, we have five minutes coming back to the Liberals.

Mr. Carr, you can then prompt Mr. Weston again.

Answer very quickly, Mr. Weston.

[Galen G. Weston]

There are meaningful impacts that we are managing throughout the value chain on, let's call it, a weekly basis.

[Ben Carr, Liberal, Winnipeg South Centre, MB]

Thank you.

[The Chair, Liberal, Kody Blois]

Mr. Perron, you have two and a half minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Mr. Weston, I'm going to try to summarize all this. You said that the best possible outcome would be for everyone to sign on to the code. Then you said that your company had been excluded from the steering committee and the working group. According to my information, you didn't participate in them.

I just want to be sure I have this right. Has your company ever been part of the steering committee or the working group developing the code, yes or no?

[Galen G. Weston]

Certainly, we have a team with three particular executives who have been actively involved in discussions about the code. All I said was that we were not on the working committee. We have had the opportunity to provide our feedback, and that feedback was not accepted.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Then, the answer is no, you did not participate in the steering committee or the working group.

You said that because you have a chain of discount stores, you couldn't commit to abiding by the code. Metro, however, is ready to make that commitment, and Metro has a chain of discount stores under the banner of Super C.

How do you explain the difference between your two companies?

[Galen G. Weston]

I've never said we couldn't get involved. I've just said there are four elements of the code, and we believe the way that it's drafted should be adjusted. We have put forward what we consider to be very reasonable solutions that we think can achieve the best of both worlds.

All we're asking for is the ability to engage in that discussion in a constructive way.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you.

You appeared before the committee in March, along with the heads of the other major industry players. At that time, I asked all five of you for a breakdown of your profits. All five of you said you couldn't provide that information for competition reasons. Then I asked you whether you pledged to provide the information to the Competition Bureau. I thought all five of you had said yes. Unfortunately, the ensuing Competition Bureau report was critical of the fact that companies had not provided their figures.

Can you tell us whether Loblaw provided the Competition Bureau with the requested information?

[Galen G. Weston]

Yes. We provided it before this committee six months ago. We've been fully supportive of what they've asked for and given them everything that we could.

[The Chair, Liberal, Kody Blois]

Thank you so much, gentlemen.

Mr. MacGregor.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Mr. Chair.

Mr. Weston, the code of conduct industry group's response to your company was pretty scathing. They said that, contrary to your claims, there was no evidence to suggest the code will either raise food prices or negatively impact the ability of retailers to meet consumer demand. They said, if anything, all the available evidence actually shows that it will curb grocery price inflation.

Is your apprehension about the code due more to the fact that you think it's going to hurt Loblaw's bottom line, instead of negatively impacting consumers? They've laid out a fairly substantial case here to refute everything that you've said so far.