“The freezer aisle is very busy these days, as people seek refuge from food inflation. Nestlé’s departure from Canada will eliminate many options. The void will be significant,” Charlebois, senior director of the Agri-Food Analytics Lab and a professor in food distribution and policy at Dalhousie University, told The Epoch Times.
The move to remove its frozen food line from shelves is a strategic one. The company said it will focus on long-term business growth and “allow for reinvestment in portfolio lines.”
“Nestlé occupies at least four of five doors of the freezer aisle in the typical grocery store,” noted Charlebois. While Canadians could be “better off in a couple of years,” he predicts the next six months will be “critical.”
The professor does not anticipate empty shelves, just higher prices. He said grocers will fill the freezers in some way, but taking a competitor out of the market will “definitely not push prices lower.”
He says Canada’s four main giant grocery retailers—Sobeys (which includes Safeway and FreshCo), Loblaw (which includes Extra Foods, No Frills, Dominion, and others), Walmart, and Metro (which has stores in Quebec, Ontario, and New Brunswick)—will possibly “try to capitalize on in-store brands,” meaning ramping up production on their own in-house versions of popular name brand products.
Charlebois also suggested that Nestlé may be doing a “stop-sell.”
“Nestlé doesn’t manufacture in Canada, so it is not like they are closing down. They could easily come back if they wanted, or license distributors to sell their products in Canada,” he said.
He noted that Nestlé may find that the costs to operate in Canada are too high and “they’re just walking away as a result,” waiting for better market conditions.
The announcement that these products will disappear in six months “doesn’t mean that they’re not going to come back. Right now, the dominance of just a few grocers in the country makes it hard for CPG [consumer packaged goods] companies to survive and invest in Canada,” added Charlebois.
Nestlé’s indicated its new focus will include candy, coffee and beverages, ice cream, infant foods (formula) and supplements, health science products, pet food, food service, and premium waters.
Nestlé does not have a factory in Canada that produces its TV dinners and frozen pizza products, and said it would work with retail partners to help with the exit of the products that will no longer be available.
The company, which did not respond to inquiries from The Epoch Times, reported that its total sales increased 3.3 percent to $87.1 billion.
Loblaw and Sobeys did not return requests for comment as to how they would replace Nestlé products.
Metro spokesperson Stephanie Bonk said she could not comment. “This news is recent and we don’t have all the details,” she said.
