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Launching a Grocery Industry Code of Conduct

Left, Errol Cerit, executive vice president for industry, public affairs and business development, Food Health and Consumer Products of Canada and Doug Nathanson, executive vice president, chief development officer and general counsel, Empire Company Limited.

The release of a Grocery Code of Conduct is imminent. After two years of rigorous debate, the Code is ready for public consultation.

Grocery Business sat down with two of the architects of the design team, Doug Nathanson, executive vice president, chief development officer and general counsel, Empire Company Limited, and Errol Cerit, senior vice president, industry affairs and membership development, Food, Health & Consumer Products of Canada (FHCP), to get a better understanding of the Code. Both were the co-authors of the March 2021 FHCP–Empire “Grocery Supply Code of Practice for Canada.” The draft code formalized conversations about a code across Canada.  

How will the Code benefit the industry in Canada?

It is a necessary step to improve the resiliency and efficiency of the grocery supply chain in Canada.The primary objective is to improve supply chain relationships through guiding principles of predictability, certainty, transparency, and fair dealing. By providing clarity for business practices and establishing guiding principles, the Code will improve industry relationships overall and ultimately benefit Canadians.

The development of the Code was a collaborative effort, designed to be reciprocal and balanced to benefit producers, suppliers and retailers from the smallest to the largest companies across the value chain. Each provision and guiding principle were carefully considered, after rigorous debate from all parties at the negotiating table.

How is the Code structured and what does a successful Code look like?

It is modeled after the U.K. Groceries Supply Code of Practice that has been in practice for over 10 years. There are three main components within the Canadian draft Code: guiding principles and trade rule provisions; a governance model; and an adjudication and dispute resolution process, all of which work together to promote fair and ethical dealing and contractual certainty.

A successful solution in Canada will require the participation of all applicable retailers, suppliers and primary producers representing the full value chain of the grocery industry. Another success criterion will be the adoption of a “light touch” adjudication model, as is in place in the U.K., which encourages trading partners to work collaboratively to resolve issues directly, while providing education and support to facilitate adoption. 

The U.K.’s Code has yielded tremendous and mutual benefit for retailers, suppliers and consumers. Readers can review the published annual reports from the U.K. code adjudicator online.

How was the Code designed and who was involved?

This was not an overnight process. It’s been two years since FHCP and Empire jointly proposed the first-ever draft code for Canada. That proposed code, spurred by vocal support by Empire’s CEO Michael Medline, opened doors to wider discussions and government calls for a larger, industry-led development process. This in turn led to the creation of a 10-person multi-stakeholder steering committee of association leads (co-chaired by FHCP CEO Michael Graydon and RCC president and CEO Diane Brisebois) to develop an implementation framework.

A 25-person cross-industry working group comprising grocery executives representing retail, manufacturing and primary processing was then established to bring on-the-ground experience.

Subsequently, the Code Design Team was established. It worked for several months to negotiate and finalize the Code of Conduct provisions, completed successfully in November 2022. This was a significant accomplishment and a tremendous step forward.

The team consists of Serge Boulanger, senior vice president, procurement and corporate brands, Metro Inc.; Errol Cerit, senior vice president, FHCP; Ted Lawson, chief commercial officer, Nortera Foods (formerly Bonduelle); Patrice Leger Bourgoin, general manager, APM Quebec; Doug Nathanson, executive vice president, chief development officer and general counsel, Empire/Sobeys; Luc Prevost, executive vice president, sales and marketing, Vegpro International; Mark Taylor, president and CEO, Lactalis Canada; and Giancarlo Trimarchi, president, Vince’s Market.

In tandem with the above, the Steering Committee began its work on the development of a Code governance model, which will be presented along with the trade rule provisions during the industry education and consultation sessions taking place in April and May of 2023.

When looking at how far we have come in two years, it is important to acknowledge the broad expertise, vision and diligence of the many individuals who got us here – their understanding and willingness to compromise, innovate and build a balanced solution aimed at benefitting the entire industry truly made this possible.

What are the next steps towards implementation?

In April and May, the industry will have an opportunity to participate in education and consultation sessions. While the association leads on the Steering Committee represent the majority of the grocery supply chain, it’s important to ensure all stakeholders understand the journey and the context of how the teams have arrived at the solutions, while having the opportunity to raise questions and provide feedback to the Steering Group and Code Design Team. 

We recognize there is no such thing as a perfect solution. At the same time, we cannot delay any longer and must move forward for the benefit of the industry and of all our customers. The government and the public are eager for a Code – we must deliver one.

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