One of Canada91裸聊视频檚 biggest food manufacturers has halted shipments to the country91裸聊视频檚 largest grocer in an extreme example of how inflation is impacting the food industry and driving a wedge between some retailers and suppliers.

At issue is a dispute over pricing between Frito-Lay Canada and Loblaw Companies Ltd. as the maker of brands like Cheetos, Doritos, Lays, Ruffles and Sunchips tries to recoup higher costs.

The situation has left the chip and snack food aisle of many Loblaw stores less full than usual or stocked with the retailer91裸聊视频檚 house brands, President91裸聊视频檚 Choice and No Name.

Frito-Lay spokeswoman Sheri Morgan confirmed there is a 91裸聊视频渢emporary disruption91裸聊视频� with one customer.

91裸聊视频淥ur business has faced unprecedented pressures from rising costs of items including ingredients, packaging and transportation,91裸聊视频� she said in an email.

91裸聊视频淭o help offset these pressures on our Canadian operations 91裸聊视频� we have made adjustments to our prices that are consistent across the marketplace.91裸聊视频�

Loblaw spokeswoman Catherine Thomas said the grocer is 91裸聊视频渓aser focused91裸聊视频� on minimizing retail price increases.

91裸聊视频淲hen suppliers request higher costs, we do a detailed review to ensure they are appropriate,91裸聊视频� she said in an email. 91裸聊视频淭his can lead to difficult conversations and, in extreme cases, suppliers don91裸聊视频檛 ship us products.91裸聊视频�

The rift between Frito-Lay and Loblaw exposes deepening tensions in Canada91裸聊视频檚 food industry that many experts say could worsen as supply chain challenges and inflation continue.

Some argue that grocers are simply trying to keep sticker prices low and stop suppliers from using inflation to justify unreasonable price hikes.

Others suggest grocers are using their market strength to bully suppliers and pad their bottom lines.

91裸聊视频淚t91裸聊视频檚 challenging that it has devolved into such a confrontational relationship,91裸聊视频� said Michael Graydon, CEO of Food, Health & Consumer Products of Canada, an industry group which lists Frito-Lays parent company PepsiCo Foods Canada among its members.

91裸聊视频淭he level of frustration is growing.91裸聊视频�

The increase in wholesale prices some suppliers are seeking from retailers will help mitigate ongoing inflation but won91裸聊视频檛 completely offset higher costs, he said.

The final price consumers pay in stores is set by grocery retailers 91裸聊视频� not food manufacturers, Graydon said.

However, retail industry advocates say food manufacturers are in some cases seeking price hikes that outpace inflation.

Retail Council of Canada spokeswoman Michelle Wasylyshen said the industry group, which represents Loblaw, has been contacted by both big and small grocery retailers about a flood of new price increases in January from vendors.

91裸聊视频淭his follows an already alarming number of increases in the preceding quarter,91裸聊视频� she said. 91裸聊视频淚n many cases the increases are unprecedented and far exceed typical food inflation levels.91裸聊视频�

Statistics Canada said last week that food prices increased 6.5 per cent in January, the biggest year-over-year jump in grocery bills in more than a decade and higher than the overall annual inflation rate of 5.1 per cent.

It91裸聊视频檚 unclear how the loss of sales at Loblaw, which includes conventional chains such as Zehrs, Atlantic Superstore and Provigo and discount stores No Frills and Maxi, could impact Frito-Lay.

The company91裸聊视频檚 products are made in Canada, largely using Canadian potatoes grown by local farmers. Experts say a long-term drop in sales could ultimately hurt local producers.

But experts say brand loyalty will work in the chipmaker91裸聊视频檚 favour.

91裸聊视频淔rito-Lay is betting that the loyalty consumers have for their brands gives them leverage to make this move,91裸聊视频� said Joel Gregoire, associate director of Canada Food and Drink with market research company Mintel.

Yet pulling supply from Loblaw 91裸聊视频� which holds the largest share of grocery sales in Canada 91裸聊视频� is also risky for the food manufacturer, he said.

91裸聊视频淣ot filling orders to Canada91裸聊视频檚 largest grocer will no doubt have a substantial impact on Frito-Lay91裸聊视频檚 near-term sales,91裸聊视频� Gregoire said.

More broadly, he said the dispute appears emblematic of a broader battle for pricing leverage between grocers and manufacturers.

91裸聊视频淭his tension is not new, but this move by Frito-Lay has high stakes,91裸聊视频� he said. 91裸聊视频淭his is a battle to maintain margins as costs rise.91裸聊视频�

Indeed, food expert Sylvain Charlebois said the friction between Frito-Lay and Loblaw is the 91裸聊视频渢ip of the iceberg.91裸聊视频�

The hostility between retailers and manufacturers could worsen in the coming months, he said.

91裸聊视频淭his is not just about chips,91裸聊视频� said Charlebois, Dalhousie University professor of food distribution and policy. 91裸聊视频淲e91裸聊视频檙e going to be seeing this in other food categories like bakery and dairy as well.91裸聊视频�

91裸聊视频擝rett Bundale, The Canadian Press

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