Saturday, March 19, 2016

French's ketchup has back stories

The decision Loblaws made to delist, then reinstate French's ketchup seems to me to be related to some nasty industry pressure tactics.

It's now clear that Loblaws was wrong when it said it was delisting French's because it wasn't selling well enough.

The real reason, revealed in leaked internal communications, has been said to be erosion of market share for Loblaws' private-label President's Choice ketchup.

I think there's another related reason.

Loblaws has used its private-label business to pressure processors to make better deals. Those who win the competition get to have both their own brand and the Loblaws brands on store shelves. And in some cases it's more than President's Choice, but also Loblaws' No Name brand. Losers are out of luck.

So I wonder whether Highbury Casco Corp. which took over the former Heinz plant in Leamington lost the competition to produce President's Choice ketchup and, related to that, has its French's ketchup delisted.

In any case, French's is back on the Loblaws shelves. That may be a big disappointment to the competitor which is likely Heinz making both its own brand and probably President's Choice.

Loblaws is not alone in employing these pressure tactics. Sobeys and Metro also have their private-label products.

The real losers are farmers and factory workers because they're the ones with the least bargaining power in this supply chain.