Let’s talk about why Canada’s food and consumer brands are leaving

A walk down the aisles of Canadian stores these days presents a quietly disturbing sight: gaps. Some of the household brands that Canadian families have relied upon for generations are slowly disappearing from our shelves. Last week it was announced that Kleenex tissues would say goodbye, prior to that, Nestle brought an end to Delissio and Stouffers and before that, Skippy peanut butter bid a farewell, leaving Canadians to ask, “Why is this happening”?

The answer is complex, multifaceted, and a bellwether of broader economic challenges we face as a nation.

1. Economic Pressures: The Canadian marketplace, is relatively small by world or even North American standards. Combine this with rising operational costs, increased taxes and declining consumer demand, and you get an environment that’s tough for businesses. In some cases, it becomes more economically viable for companies to consolidate operations and focus on larger, more lucrative markets.
2. Labour Shortages: Canada’s food processing industry alone is riddled with over 45,000 job vacancies. This issue isn’t just numbers on a report; it translates to production slowdowns, increased costs and operational inefficiencies. And while there have been steps in the right direction, through measures like increasing the Temporary Foreign Workers (TFW) program cap and increasing economic immigration, we need to quickly see results so that production is not slowed due to a lack of labour.
3. Regulatory Burdens and Delays: While regulations are essential to ensure quality and consumer safety, overregulation stifles innovation and growth. ?Our companies are constantly adjusting to new regulations on how to make, label, package and sell their products.? It’s hard to keep up.? Cumulative and sometimes even contradictory changes in labelling requirements, packaging restrictions and sustainability mandates increase costs for businesses. Companies need a predictable regulatory environment to thrive. ?Instead, they’re faced with a labyrinth of rules imposed by several federal departments in silos, that also vary between provinces and often differ significantly from global standards. The result? Added costs for adaption, making the Canadian market less appealing for both domestic and international brands.?
4. Global Competitive Landscape: While Canada grapples with internal challenges, the world isn’t waiting. Countries are aggressively courting companies with attractive incentives, technological infrastructure, and a conducive business environment. ?In the U.S., their Industrial Policy is already paying off and they are experiencing a factory building boom fueled by generous incentives including the Inflation Reduction Act. ?We’re not just competing for customers; we’re competing to be the best place to operate.?
5. Consolidated Grocery Market: Canada’s grocery industry is concentrated with five retailers controlling more than 80 per cent of grocery and drug store sales. Grocery giants have used this power imbalance to unilaterally impose fees and raise costs on farmers and manufacturers. This contributes to manufacturers rationalizing products meaning less consumer choice, price inflation and less competitiveness within our sector.
6. Supply Chain Challenges: Recent global events continue to underscore the fragility of supply chains. In Canada, these challenges are accentuated. Geographical vastness, coupled with ageing infrastructure and transportation disruptions due to ongoing and frequent strikes and weather, have made it a logistical nightmare for companies to ensure their products reach the shelves in time.

Taken together, the list above paints a difficult picture. It’s also essential to recognize that the departure of recognized brands isn’t just a loss of products; it’s a loss of jobs, a hit to our communities, a dip in our GDP, and a dent in our national pride. Each exit underscores the need for Canada to be more business-friendly, to be more in tune with the needs of industries that have and continue to be the foundation of our economy.

As FHCP CEO, my ask is simple. Let’s work together as Canadians, government and industry to champion for reforms that make it easier for businesses to operate here. Let’s better understand the appreciate the challenges faced by home-grown brands and multinationals doing business here, ensuring the Canadian marketplace remains viable and sustainable. The brands we love are more than just labels; they’re part of our national fabric. It’s time we fought to keep them here.

Note: Next week I will release a companion op-ed that outlines potential solutions and what they could mean.

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