Private Brands continue to cause a stir worldwide, this time in Canada where manufacturer brands are calling retailers and their brands “double agents” claiming that Private Brands are bad for local farmers and consumers. The story as reported in an article in the Canadian daily newspaper the Montreal Gazette presents a rather snarky trade association spokesperson complaining about competition and asking the Canadian government to change the rules.
The Food & Consumer Products of Canada, representing such multinational companies as General Mills Canada and Kraft Canada told Canadian parliamentarians studying the food supply chain on Wednesday that the growth of Private Brands in Canadian stores impedes innovation, investment and poses a threat to farmers, consumer choice and competitive pricing. (Yet there is no evidence that these mult-nationals are buying any more local or Canadian products than Private Brand manufacturers)
“Retailers in Canada today are not merely the buyers of our products who control the shelf space. They are also direct competitors. They now play a ‘double agent’ role,” Derek Nighbor, the group’s senior vice-president of regulatory affairs, told MPs on the agriculture committee of the House of Commons.
“Let me be clear from the outset. My remarks today are not to be construed to be anti-store brand nor are they to suggest that the increased prevalence of store brand products are anti-competitive. The challenges our industry is seeing today – and is concerned about for tomorrow – relates not to the presence of store brands themselves, but rather the associated business practices that have resulted at the manufacturer-retailer interface.”
In addition to “parasitic copying” and “look-alike products” in stores after manufacturers “invest millions of dollars in product development and marketing to establish their brands and to build loyalty with their consumers,” Nighbor complained that retailers are demanding more information from manufacturers.
This includes data such as input costs, product formulations and marketing, and innovation plans, he told MPs.
“Some retailers request up to 26 weeks of lead time on new products. This creates serious challenges for manufacturers who are seeking precious shelf space in leading stores – yet are concerned about the longer-term impacts of sharing such information with retailers and how it might be used against them.”
Nighbor said it’s time to update the Grocery Bulletin, housed at the Competition Bureau, which governs appropriate actions in this area. It was first published in 2002 in response to concerns about consolidation in the grocery retail sector, but it “does not address store brand issues and the issues associated with retail acting as a ‘double agent’ or competitor,” he said, pointing out about 6,000 processing facilities in Canada purchase and use over 40 per cent of what Canadian farmers produce. “We are concerned that if the Canadian government does not review these issues in a substantive way like governments in the United Kingdom, Ireland, Australia, Norway and the European Union have, then we are putting the future of our Canadian food and consumer products manufacturing sector, farmers and Canadian consumers at risk.”