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Calgary co-op grocery stores pull-out of FCL in spring

Will loosing their biggest customer hurt local food prices?
coop sign

Calgary Co-op (CCL) has announced that in the spring of 2020 it will no longer purchase groceries from wholesaler Federated Cooperatives Limited (FCL). Yet Calgary Co-op will sell other product lines sourced from Federated.

Valleyview General Manager Greg Gill says Calgary’s announcement has co-op store managers scratching their heads. “We just don’t understand what they’re doing. It would be like you owning a business and shopping elsewhere, so they’re not supporting themselves.”

FCL supplies Twin Valley Co-op and Valleyview Consumers Co-op, among about 300 grocery stores across Western Canada says FCL spokesman Cam Zimmer. Under their banner TGP (The Grocery People), FCL also has a supply agreement with Super A Foods and Big Way stores.

In a memo to its vendors, CCL says that as of the spring of 2020 it will be supplied by Save-On-Foods wholesaler.

“We don’t know how much they will save to buy from Save-On-Foods,” says Gill. “Now it gets even deeper… they’re supporting a competitor.”

Gill points out the Co-op brand continues to expand. FCL recently purchased two Big Way stores - Melita and Rivers - plus Super A Foods in Gimli and has three big co-op food stores in Winnipeg. Regina has added another grocery store and Saskatoon has two new stores.

Calgary, with 23 grocery stores, is FCL’s single largest customer, reporting $720.5 million in total last year.

Putting that into perspective, Zimmer says, “Our overall revenue from all food sales to all co-ops was $2.06 billion last year.”

FCL expects to feel the loss of Calgary’s food business next spring, in the short-term, but the wholesaler is a big player in several other retail areas as well such as farm supplies, bulk and bowser fuel, building supplies and more. Last year FCL’s overall revenue was $10.7 billion says Zimmer.

For decades now co-op groceries in small towns struggle to compete with larger stores. When asked if the group buying power of Federated Cooperatives can continue enable Valleyview to operate its small stores he said, “Through Federated Co-operatives Limited, all 170 local co-ops still have access to significant buying power, a wide transportation and distribution network, marketing and many other supports.”