Grocers stocking up on Canadian, international suppliers as shoppers avoid American

Produce is shown at a west-end Toronto Sobeys grocery store, Sunday, June 26, 2023. THE CANADIAN PRESS/Graeme Roy

Canadian grocers, large and small, are seeking alternatives to U.S. products ahead of a potential trade war, while highlighting homegrown products already available on their shelves.

The two countries are in the midst of a truce that’s set to end in early March, but grocers aren’t waiting around to see what happens.

“I think this is just the new normal that we’d better get used to working with, and in some cases, ‘working with’ just means finding other, better long-term solutions that are reliable and stable,” said Gordon Dean, who owns and operates five grocery stores in Ontario and Quebec.

Buying Canadian has always been the motto at Mike Dean Local Grocer. But the company is doubling down on what Dean calls “Canadian content.”

In the produce aisle, where Canada is particularly reliant on U.S. imports, Dean said suppliers are already diversifying.

About two weeks before Trump’s initial tariff announcement Feb. 1, Dean said suppliers started moving away from U.S.-sourced produce.

“They are pulling some product from areas of the world that we typically as Canadians aren’t used to,” he said.

“I’m selling green grapes and red grapes on my shelf right now that are product of Namibia.”

The weaker loonie has made it easier for Dean to justify the switch. He said he recently turned down several price increase requests from suppliers on U.S. products.

“We’re just going to discontinue them. I’m going to find a different replacement that is domestic,” he said.

Rick Rabba, the president of Toronto-area chain Rabba Fine Foods, is also thinking about what tariffs could mean for the fruits and vegetables he sells in his stores.

The company has been holding meetings with primarily Ontario producers to find alternatives “because we don’t know what’s going to happen,” he said.

Though Canada is quite reliant on imported fruits and vegetables in the winter, Rabba said the domestic greenhouse sector has expanded in recent years, meaning there are more alternatives for some produce, such as lettuce, than there used to be.

“It’s not that we have anything against produce from the United States. It’s just that we want to make sure that our GTA-based, Canadian-based customers don’t have an interruption of supply, regardless of what happens. So we always want to make sure that we’re looking for alternatives,” he said.

In a recent newsletter, Peter Chapman of consulting firm SKUFood said specialty grocers have been “all over” the buy Canadian trend, as they can differentiate themselves by reacting quickly.

Of the major grocers, he said Loblaw has been the most vocal.

“This is definitely an opportunity for Canadian manufacturers ... now is the time to leverage the opportunity,” he wrote.

Loblaw spokeswoman Catherine Thomas said the grocer is talking with its existing vendors to source more Canadian products, as well as looking into new and alternative local vendors.

It’s also looking to broaden its supply chain beyond the U.S., she said in a statement: “Where we have products historically made or grown in the U.S. with limited Canadian options, we will look for alternatives from other countries.”

Loblaw is also showcasing products prepared in Canada in its stores, online and in flyers, Thomas said.

The company added a “swap and shop” feature to its app which is already showing results. On a call discussing its latest earnings report Thursday, CEO Per Bank said Loblaw is already seeing a “a significant uplift in sales (of) products identified as prepared in Canada.”

He told analysts that produce will be the hardest U.S. segment to replace given Canada’s reliance on it, especially in the winter. Other products, such as cleaning supplies, can be more easily replaced including with the company’s own private-label brands.

Pierre St-Laurent, chief operating officer of Sobeys and Safeway owner Empire Co. Ltd., said customers are asking where products come from, and the grocer is responding with more signage and information to help them make their picks.

The company has lots of flexibility in its supply chain to respond to shifts in availability or price, he said in an interview.

“If a (U.S.) supplier comes to us ... with a cost increase because of tariffs, our answer will be no,” he said.

St-Laurent expects Canadian suppliers will adjust their operations to respond to growing demand. But he also thinks as time goes on, U.S. suppliers may have to make some changes.

“Some companies and some suppliers decided to concentrate their production in one country for economic reasons,” he said.

“But right now, the dynamic is changing. If they want to do business in Canada and they want to be competitive, they will have to revisit their manufacturing organization.”

Metro spokeswoman Marie-Claude Bacon said the grocer will “continue to give priority to local Canadian products whenever possible,” and work hard to mitigate any price impact.

Bacon said for many years Metro has prioritized and promoted local products in its stores. But in the coming weeks, the company plans to “optimize the visibility of local products” in-store, online and in flyers, she said in a statement.

Dean said though shoppers are happy to substitute many different foods for an alternative, big brand names like Frito-Lay and PepsiCo are harder to swap out.

“If you look at Frito-Lay, there’s tons of Canadian chip companies that could replace them, but they’re such a monster in the category,” he said.

There’s also confusion among shoppers over what counts as Canadian, he added, as many large multinational companies have manufacturing operations in Canada.

“I own grocery stores, and I’m in the same boat,” he said.

“What counts? Like, if they’re creating Canadian jobs, paying Canadian payroll, using Canadian tomatoes, that’s kind of Canadian.”

Rosa Saba, The Canadian Press

This report by The Canadian Press was first published Feb. 20, 2025.

Companies in this story: (TSX:L, TSX:EMP.A, TSX:MRU)