Empire Turns Down Supplier Bids for Tariff Price Hikes

Empire Co. executives said on Sept. 10, 2026 that fewer food items are being flagged for tariff-related price increases and that the Sobeys and Safeway parent is refusing supplier requests for such hikes, telling analysts "it's too early" to pass Canada-U.S. trade costs to shelves, as the grocer reported first-quarter profit and sales above a year earlier.

Empire Co. Ltd., the Canadian grocery operator behind Sobeys, Safeway, FreshCo and Farm Boy, is telling its suppliers no. Executives at the company said fewer food items are being put forward for tariff-related price increases despite the continuing trade dispute between Canada and the United States, and that where those requests do land, the grocer is refusing them. Their reasoning, as relayed on Sept. 10, came down to three words: "It's too early."

The comments accompanied first-quarter results in which both profit and sales came in above the same period a year earlier, according to BNN Bloomberg. That combination — growth on the top and bottom lines alongside a hard line on cost pass-throughs — is the part worth sitting with. A grocer under genuine margin pressure has every incentive to wave supplier increases through and let the shelf price absorb them. Empire is signalling it does not feel that pressure yet.

What "refusing the request" actually means in a grocery chain

Cost increases in packaged food do not arrive as a market price. They arrive as a letter. A supplier notifies the retailer that the list price on a set of items is going up on a given date, usually with a stated rationale — commodity costs, freight, packaging, labour, and now, tariffs. The retailer's category buyers then either accept the new cost, negotiate it down, delay it, or reject it outright and risk the supplier restricting shipments.

Rejecting a request is not a public gesture. It is a bet on leverage: that the supplier needs the shelf space in Canada's grocery aisles more than the retailer needs that particular brand at that particular cost. For a chain with Empire's national footprint across full-service banners and discount formats, that leverage is real, and the company is evidently choosing to use it rather than validate tariff-linked increases that it does not believe are justified by landed costs yet.

The "too early" framing matters here. Tariffs in a cross-border trade dispute do not hit a grocery cost base uniformly or immediately. Inventory bought before a measure took effect works through the system first. Some products are sourced domestically and never cross the border. Others cross it in the form of an ingredient inside a finished good, where the tariff share of the retail price is small. A supplier request that attributes a broad increase to tariffs may be attributing far more than the tariff can carry — and Empire is saying, in effect, prove it.

Fewer items being flagged points to a narrower cost shock than feared

The more informative disclosure may be the volume, not the refusals. Empire's executives said fewer food items are seeing tariff-related price increases. That is a statement about the shape of the trade shock reaching Canadian grocery shelves: narrower than the political noise around the dispute would suggest, and by this account narrowing rather than widening.

Canada's food supply chain is not a single import pipe. Fresh produce, certain proteins, wine and spirits, and a long list of packaged brands have meaningful U.S. exposure. Dairy, bakery, much of the meat case and a large share of private-label manufacturing do not. When a retailer says the count of affected items is falling, it is describing a cost problem concentrated in specific categories rather than a general inflation impulse — the difference between a category-management issue and a company-wide margin event.

For shoppers, that distinction shows up as price dispersion rather than a uniform jump. Expect the tariff effect, where it survives, to appear in a handful of aisles and specific brands rather than across the basket. It also explains why a grocer can hold the line: absorbing or blocking increases on a narrow set of items is manageable in a way that blocking a broad wave would not be.

The competitive read across Canada's grocery aisle

Empire competes with Loblaw and Metro in a market where each chain negotiates its own cost letters with the same multinational suppliers. Once one large retailer publicly refuses tariff-attributed increases, the others face a sharper choice. Accepting the same increase means either taking the margin hit or lifting shelf prices while a national competitor holds — a visible price gap in categories where Canadian shoppers have proven extremely willing to trade down to discount banners and private label.

That dynamic is why supplier price negotiations in concentrated grocery markets tend to move together. It also means Empire's stance is a piece of information for anyone modelling the sector's gross margins over the next few quarters: if tariff pass-through is being blocked at the buying desk rather than passed to consumers, the cost is being negotiated away or eaten somewhere upstream, not automatically added to food inflation prints.

The risk sits on the other side of that trade. A retailer that refuses an increase can face reduced allowances, slower shipments, or out-of-stocks on brands shoppers came in for. Empire's willingness to hold suggests it judges that risk lower than the reputational and volume cost of leading prices higher during a trade fight.

Reading it against a jittery market backdrop

The results landed on a soft day for North American equities. As of the last trade at 19:57 GMT on Sept. 10, 2026, the S&P 500 tracker (SPY) was at $757.89, down 0.59% from a prior close of $762.40; the Nasdaq 100 fund (QQQ) sat at $708.58, off 1.08% from $716.31; and the Dow tracker (DIA) traded at $520.73, down 0.64% from $524.07. Growth and rate-sensitive names carried the losses, which is the environment in which defensive food retail usually gets a second look from allocators.

Grocery earns that defensive label because people buy food in every macro regime. What varies is where they buy it and what margin the retailer keeps. Empire's message on this print is that volume and profit are both running ahead of last year while the company declines to use the trade dispute as cover for higher shelf prices — a combination that supports the defensive case rather than undercutting it.

What to watch next

Three things will test the stance. First, whether the count of tariff-flagged items keeps falling in the next quarter or reverses if the Canada-U.S. dispute escalates. Second, whether Empire's gross margin holds while it blocks increases, or whether refusals quietly become absorptions. Third, whether Loblaw and Metro adopt the same posture in their own supplier negotiations; if they do, suppliers lose the ability to play retailers against one another on tariff attribution.

For now, the operative word from Empire's executives is temporal, not absolute. "It's too early" is not a promise that tariff costs will never reach the shelf. It is a statement that the evidence presented so far does not justify it — and a warning to suppliers that the burden of proof rests with them.

Key facts

• Company: Empire Co. Ltd., parent of Sobeys, Safeway, FreshCo and Farm Boy
• Quarterly result: First-quarter profit and sales both above the year-earlier period
• Supplier stance: Refusing tariff-related price-increase requests; executives say "it's too early"
• Market backdrop (last trade 19:57 GMT, Sept. 10, 2026): SPY $757.89 (-0.59%), QQQ $708.58 (-1.08%), DIA $520.73 (-0.64%)

Frequently asked questions

What did Empire say about tariff-driven price increases?

Empire Co. executives said fewer food items are seeing price increases tied to tariffs despite the ongoing trade dispute between Canada and the United States. Where suppliers do request tariff-related increases, the grocer is refusing them, with executives saying it is "too early" to accept such hikes and pass them through to shelf prices.

Which grocery banners does Empire operate?

Empire Co. Ltd. is the Canadian parent of the Sobeys and Safeway grocery chains, and it also operates banners including FreshCo and Farm Boy. That spread across full-service supermarkets, discount formats and specialty stores gives it national scale in negotiations with the multinational food suppliers that issue cost-increase notices.

How did Empire's first-quarter results look?

Empire reported first-quarter profit and sales that were both higher than the same period a year earlier. The company did not tie that improvement to shelf-price increases from tariffs; on the contrary, executives said the number of items being flagged for tariff-related increases has been falling and that the grocer is turning those requests down.

Can a retailer really refuse a supplier's price increase?

Yes. Supplier cost increases arrive as written notices, and retailers can accept, negotiate, delay or reject them. Rejection is a leverage bet: the retailer wagers that the supplier needs Canadian shelf space more than the retailer needs that brand at the higher cost. The risk is reduced shipments or out-of-stocks on popular items.

Does this mean Canadian grocery prices will not rise from tariffs?

Not necessarily. Empire's position is about timing and evidence rather than a permanent commitment. Executives said it is "too early" to accept tariff-attributed increases, implying the requests so far are not supported by actual landed costs. If the Canada-U.S. dispute escalates and real costs rise, that calculus could change.

How were markets trading when the results came out?

North American equities were lower. As of the last trade at 19:57 GMT on Sept. 10, 2026, the S&P 500 tracker SPY was at $757.89, down 0.59%; the Nasdaq 100 fund QQQ was at $708.58, down 1.08%; and the Dow tracker DIA was at $520.73, down 0.64%. Growth names led the declines.

Sources

• ‘It’s too early’: Grocer Empire refusing supplier requests for tariff price hikes — BNN Bloomberg

Photo: Justin Vallée · Pexels Licence — source