One of CanadaB次元官网网址檚 biggest food manufacturers has halted shipments to the countryB次元官网网址檚 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 retailerB次元官网网址檚 house brands, PresidentB次元官网网址檚 Choice and No Name.

Frito-Lay spokeswoman Sheri Morgan confirmed there is a B次元官网网址渢emporary disruptionB次元官网网址� with one customer.

B次元官网网址淥ur business has faced unprecedented pressures from rising costs of items including ingredients, packaging and transportation,B次元官网网址� she said in an email.

B次元官网网址淭o help offset these pressures on our Canadian operations B次元官网网址� we have made adjustments to our prices that are consistent across the marketplace.B次元官网网址�

Loblaw spokeswoman Catherine Thomas said the grocer is B次元官网网址渓aser focusedB次元官网网址� on minimizing retail price increases.

B次元官网网址淲hen suppliers request higher costs, we do a detailed review to ensure they are appropriate,B次元官网网址� she said in an email. B次元官网网址淭his can lead to difficult conversations and, in extreme cases, suppliers donB次元官网网址檛 ship us products.B次元官网网址�

The rift between Frito-Lay and Loblaw exposes deepening tensions in CanadaB次元官网网址檚 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.

B次元官网网址淚tB次元官网网址檚 challenging that it has devolved into such a confrontational relationship,B次元官网网址� 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.

B次元官网网址淭he level of frustration is growing.B次元官网网址�

The increase in wholesale prices some suppliers are seeking from retailers will help mitigate ongoing inflation but wonB次元官网网址檛 completely offset higher costs, he said.

The final price consumers pay in stores is set by grocery retailers B次元官网网址� 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.

B次元官网网址淭his follows an already alarming number of increases in the preceding quarter,B次元官网网址� she said. B次元官网网址淚n many cases the increases are unprecedented and far exceed typical food inflation levels.B次元官网网址�

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.

ItB次元官网网址檚 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 companyB次元官网网址檚 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 chipmakerB次元官网网址檚 favour.

B次元官网网址淔rito-Lay is betting that the loyalty consumers have for their brands gives them leverage to make this move,B次元官网网址� said Joel Gregoire, associate director of Canada Food and Drink with market research company Mintel.

Yet pulling supply from Loblaw B次元官网网址� which holds the largest share of grocery sales in Canada B次元官网网址� is also risky for the food manufacturer, he said.

B次元官网网址淣ot filling orders to CanadaB次元官网网址檚 largest grocer will no doubt have a substantial impact on Frito-LayB次元官网网址檚 near-term sales,B次元官网网址� Gregoire said.

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

B次元官网网址淭his tension is not new, but this move by Frito-Lay has high stakes,B次元官网网址� he said. B次元官网网址淭his is a battle to maintain margins as costs rise.B次元官网网址�

Indeed, food expert Sylvain Charlebois said the friction between Frito-Lay and Loblaw is the B次元官网网址渢ip of the iceberg.B次元官网网址�

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

B次元官网网址淭his is not just about chips,B次元官网网址� said Charlebois, Dalhousie University professor of food distribution and policy. B次元官网网址淲eB次元官网网址檙e going to be seeing this in other food categories like bakery and dairy as well.B次元官网网址�

B次元官网网址擝rett Bundale, The Canadian Press