Maple Leaf plans to hike prices for food products early next year

One of Canada’s largest meat processors will increase the cost of its products in a bid to offset price inflation in fuel, feed, freight, packaging and poultry.

Maple Leaf Foods MFI-T plans to adjust its prices in the first quarter of next year in response to a “challenging external environment,” chief executive Curtis Frank said in the company’s third-quarter earnings call on Wednesday morning. The company said it had not yet announced the details of the price hike to its customers, which include all major grocery retailers across Canada. Maple Leaf products are found in 92 per cent of households across the country.

Maple Leaf is paying eight per cent more for live poultry compared with the same period last year, Mr. Frank said, adding that chicken products account for 40 per cent of the company’s overall sales. Fuel surcharges have also increased 17 per cent in the last quarter, alongside “near everything else,” including labour, packaging and ingredients.

“When you lump all those together, there’s just more overhanging general inflation than we would have expected at this point in the year,” Mr. Frank said. “We’re going to have to address that early in the year next year.”

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The war in the Middle East drove a 27.8-per-cent spike in gasoline prices in September compared with the same period last year, according to Statistics Canada. High oil prices drove annual inflation to rise 3.1 per cent, reported the agency.

The closure of the Strait of Hormuz also substantially hiked the cost of farming. Approximately one-third of global fertilizer trade moved through the narrow channel.

Chicken prices have also climbed substantially as demand soars in response to high beef prices and a consumer craze for protein. Farmers have struggled to keep up because of a shortage of fertilized eggs and chicks resulting from the Avian flu.

Maple Leaf has already passed some of the costs of the global energy crisis on to consumers. In April, The Globe and Mail reported that Maple Leaf Foods was introducing a fuel surcharge of $0.11 a kilogram on its prepared meats and poultry shipments. The fee would add as much as $2,200 in additional costs per 20,000-kilogram tractor-trailer of food, The Globe reported.

But it is becoming increasingly challenging to pass along costs to consumers, who are also struggling with widespread inflation and rising interest rates, Mr. Frank said in the investor call Wednesday.

The company is responding by investing more heavily in advertising and promotions, and by continuing its disciplined cost allocation strategy. In mid-September, Maple Leaf announced it would close plant-based meat-processing plants in Seattle and Turners Falls, Mass., to consolidate operations in a “Plant Protein Centre of Excellence” in Indianapolis, Ind.

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As a result of the company’s broad strategy, it still “delivered a strong third quarter” despite challenging circumstances, said Mr. Frank.

Sales increased by 2.4 per cent to $1.03-billion, the company’s eighth consecutive quarter of year-over-year growth. The company’s branded products – in particular its protein snack kits – benefited from the consumer protein trend, as did its relaunch of Yves Veggie Cuisine, a 40-year-old Canadian brand Maple Leaf purchased late last year. The company reported 4-per-cent growth in retail and food service sales of poultry.

But the inflationary environment will take a toll on the company’s performance in the 2026 fiscal year results. Maple Leaf’s full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) will be around the bottom of its previous outlook range of approximately $520-million to $540-million, and the company’s capital allocation range will span from $130-million to $150-million, compared with its previous range of $160-million to $180-million.

“We are managing the near term environment with discipline, while continuing to make the right choices for the long-term health of the business,” Mr. Frank said.