Grocery code of conduct nears the finish line

Canada’s first-ever grocery code of conduct, which is aimed at improving the industry’s supplier-retailer relationships, should be in operation early next year.

Though the rules of engagement of the code were completed in July, its governance—which includes the bylaws and operating procedures to get a not-for-profit organization up and running– remains a work in progress.

“There's a tremendous amount of work that the steering group has put into this, and we can see the light at the end of the tunnel,” says Errol Cerit, executive vice-president industry, government relations and membership development at the supplier industry group Food, Health & Consumer Products of Canada.

Aside from settling issues around board governance, the next big step will be to hire the adjudicator, who will enforce the code and resolve disputes in a timely manner. A search process for the adjudicator could begin before the end of the year.

Once it comes into force, the voluntary code will provide “game changing” benefits for the industry, he says. “I truly believe that at the end of the day it will drive more loyalty and more trust in the industry.”

Issues including fines, charges retail chains levy on suppliers and reliable supply for independents have been addressed in the code, says Gary Sands, senior vice-president, public policy and advocacy, Canadian Federation of Independent Grocers. He would not provide further details.

Cerit says the type of enforcement for the code “is still something we are in the process of finalizing [but] the essence of it is more about driving compliance rather than focusing on how you punish for non-compliance.”

Cerit says the Canadian code will mirror the United Kingdom's code in which the adjudicator ranks companies involved with the code for compliance. The result, he says, is they “compete to be the most trusted company to do business with.” Frequent reporting provides a “deterrence from companies not wanting to be on the bottom of the list.”

The goal is “more about driving culture then punishing somebody for doing something wrong.”

Canada’s grocery code of conduct is intended to address contentious industry issues that include arbitrary fees, cost increases imposed without notice and late payments.

In July 2021, federal, provincial, and territorial ministers called for a grocery code of conduct that would develop a fairer relationship between suppliers and retailers.

Unlike the U.K.’s government-led model, Cerit says Canada’s grocery code of conduct will be voluntary and industry-led.

“I am so damn proud of that because to achieve that means that what we designed works for both sides,” he says. “This is an industry issue that needs an industry solution, and we did that—the benefits are designed to provide benefit for the entire value chain.”

The Grocery Code Adjudicator Office will receive some government financing to get it off the ground. However, the organization is designed to be funded by its members.

There will be an 18-month review process that begins once the code launches and Cerit is confident the code will continuously adapt as the grocery industry evolves.

Sands says all members of the code will have equal rights to avail themselves of the principles that are laid out in the code, which will be a “huge benefit” for independent grocers and small suppliers dealing with the big retail chains.

However, “we’re not saying this is going to be a perfect document. It’s not the Magna Carta.”

He says the grocery code of conduct will not level the playing field in an industry that is comprised of large, medium and small-sized players. Rather, the code is putting signage and speed limits on the road that will describe acceptable and unacceptable behaviours.

 “If you’ve signed on to the code, then you’re abiding by the code,” Sands says. “It’s about principles.”

Sands says the code will vastly improve the current situation in which there are no complaint mechanisms for retailers or suppliers who feel they’re not being fairly dealt with fairly.

“Under the code, there is a process and you’ll be treated equally as if you’re a large retail chain,” he says. “Establishing that process is a huge step forward and I think people will need to give it a chance.”