Food Fraud, Record Profits, and Bread Scandals Abound

When I was a financial advisor prior to joining Brooks Pepperfire Foods, I followed the International equity markets very closely, so as to ensure I knew where my clients' investments stood vis-a-vis the world, at any given moment.

Back then I often felt the pressure on my clients of the "tail wagging the dog". By that I mean that the financial markets seemed to be swaying clients into doing what the market makers seemed to want them to do in spite of it being the worst thing for them to do with their money. I wasn't very popular amongst my fellow brokers who toed the "sell what needs to be moved" line. You see, I learned how to follow the markets by working in the cash cage, the heartbeat center of a market maker; although a much smaller company when I was with them, they are now known as ScotiaMcleod. And likely if you don't toe the line these days, you don't get the coveted chair as a broker, the line I got was you can't be a broker because you are a woman. That was 1987. I wonder if there are actually any women in the pits, yet, there weren't then, unless they knew someone. But I digress.

My point is that today I watch the grocery store prices seeming to go through the roof and the media and certain politicians are playing the refrain that the Grocery Oligopoly is gouging consumers. The Oligopoly swears that the price increases were necessary to survive the pandemic, yet FREEZES their pricing at the TOP of the pandemic pricing, thereby garnering themselves free national publicity. Gotta love Media Releases. Meanwhile, their largest competitor comes out publicly and defends them, so they get national publicity as well. This is business as usual, they said.

Uh huh, business as usual. Price freezing at the END of the pandemic, as opposed to the beginning. Record profits. Let me say that again; RECORD PROFITS.

So the big question is, are they gouging. Are the market price increases real and or justified?

Well, frankly, it depends on whom you ask. If you ask the people who are BENEFITING from the price increases, they were absolutely necessary and there was no way around them.

For what it is worth when people stopped going to restaurants their grocery bills went up. That is often something that happens during a recession, and why both grocery and restaurants supposedly operate on 3% margins. So, usually during a recession, people tuck in their belts, stop going to restaurants so often and spend more on home cooking. When they feel less constrained, financially, they shop more, they go back to restaurants, more often.

What was different about the pandemic recessionary inflation is that in the first year nearly 100% of the restaurant sales flipped to retail. So increased profits could be realized. Interestingly, though, small retailers did not see the doubling in profits primarily because their work load doubled, their costs increased and their work force shrank, because everyone who was working for less than $2000 take home, a month, took the proffered furlough, if they were eligible.

My husband and I work for dividends, if we can earn them, and so, had we shut down our business we would not have been eligible for any support and all of our employees would have taken a pay cut.

If I start back at the beginning of the pandemic, and I tell you how and where OUR price increases occurred, you'll see that I have a very different opinion about price gouging than our friends at Loblaws and the other grocery chains.

At the beginning of the pandemic when supply chain disruptions interrupted the supply of glass. Our warehouse supplier contacted us and told us that if we were not using a type of jar or bottle already to not bother requesting them, all stock was being held for existing customers until further notice. So we couldn't get containers for new products in spite of a new customer wanting them. We were relegated to only using glass or plastic bottles or jars that we were already using.

Then the price per jar began creeping up.

Then we were notified that a bigger client than we were had reserved all of a certain type of glass and we could no longer have access to it, at all.

Then we were notified that prices were going up, again. That happened four times. For a total of 100% increases on some jars. Most averaged a 20% price increase. Those prices have NOT backed off, and we do not anticipate them backing off, at all, with perhaps an exception of the most outrageously priced ones. And although we watched the  price of containers for shipments from China (alone) go from $3000 to $25,000, and the price for them has dropped backed down to a more usual price of $4000, no corresponding price decrease has been passed on to us their clients. So we cannot pass them on ourselves.

Our supply chain ingredients were fun to watch as well.

Prior to the pandemic, were had been unable to purchase tomatoes at wholesale/manufacturer quantity nor pricing since Loblaws' Ketchupgate scandal. Out of the blue one of our local organic tomato suppliers called us and asked if we could use Savoura's organic tomatoes because they had to close their retail sales.

We jumped at the opportunity. I do not believe we will ever have an issue being supplied with locally grown organic tomatoes, anymore, in spite of Savoura raising their prices to us slightly when their retail sales kicked back in last year.

Sugar has been entertaining to watch bounce around. The prices of certain fruits and vegetables remain untouched and others ask prices that make so little sense that you just know they are going to end up in the seconds room, where, deeply discounted, they end up either in sauces or in the compost.

Prior to the pandemic Grocery purchasers were not particularly loosey goosey about paying their suppliers, in fact, if they made an order with you, the amount of money they charged you just to get set up to suit them, cost you all of your profits for a while before you ever covered them. Worse, they pay minimum 120 days, and if your product doesn't sell fast enough, they fine you and make you take it back at a discounted price. If your truck is too early or too late for a delivery appointment, they fine you.

We saw what Big Company pushback looks like when Pepsico decided they weren't going to play Loblaws' game. Did you notice? Pepsico is back on Loblaws shelf, shhhh. Don't tell them I feel played, yet again.

You see, in food manufacturing since 2003, geek, FA that I am, I watch my industry like a hawk. I see what the industry does to people and frankly, if Loblaws is making 11.7% profits, they are sucking it out of the pockets of poor dirt farmers somewhere, IYAM. Farmers who are made to till about a third of their crop because it is imperfect. Then 1/3 of the crop that DOES make it to market is THROWN OUT because it didn't get sold quickly enough. Then we as consumers throw out about a third of the food we purchase because we didn't cook/eat it quickly enough.

At the end of the day. There really isn't anything one can do about the price setting that Loblaws and their cohorts are doing. We the consumer continue to demand exactly what they provide us, with our wallets. In spite of knowing full well how they rip us off. But, that is just capitalism. They're really only taking advantage of what the market will allow. And the market, if you ask me, is oblivious to the true cost of their food, and so cannot and do not pay for it.

Shop better. Your dollars have more power than you know.

2 commentaires

  • Hey Lino! Thank you! For what it is worth, I don’t care if Loblaws gets angry. It’s true and they never care if they make ME angry. — Tina

    Tina Brooks
  • Great article. Hope Loblaws does not get too angry!


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