The Canadian Grocery Code of Conduct: What It Means for CPG Shelf Management
On the table in 2025, Canada’s long-debated Grocery Code of Conduct, a framework designed to bring greater fairness, transparency, and accountability to the $162 billion grocery sector.
The Code follows years of disputes between grocers and suppliers over trade terms, fees, and access to shelf space. For CPG leaders, the Code represents both an opportunity and a challenge: it changes the rules of engagement in how shelf management, compliance, and promotions are handled.
What Is the Grocery Code of Conduct?
The Code sets standards around:
- Fair dealing: Preventing unfair practices in trade negotiations.
- Transparency: Clearer terms for fees, promotions, and deductions.
- Dispute resolution: Providing a framework to resolve conflicts between retailers and suppliers.
For CPG companies, this means less unpredictability, but also more scrutiny.
Shelf Management Under the Code
One of the most significant impacts of the Code is how it reshapes shelf management. Retailers will now demand:
- Stricter compliance monitoring: Planograms must be followed precisely.
- Transparent promotions: Brands must prove discounts are executed correctly.
- Documented accountability: Shelf audits and compliance data will be mandatory, not optional.
This means CPG leaders must be prepared with real-time merchandising data to validate performance.
The Risk of Non-Compliance
Under the Code, non-compliance won’t just mean lost sales, it could mean contractual penalties.
NielsenIQ (2025) projects that failure to comply with Code standards could cost Canadian CPGs up to 7% of annual sales. That includes losses from shelf reallocation, reduced promotional slots, and strained retailer relationships.
The Role of AI and Field Teams
The timing of the Code coincides with the rise of AI-powered shelf monitoring and national field execution teams. Together, these provide CPGs with the tools to meet new standards:
- AI audits: Validate compliance across thousands of stores quickly.
- Predictive analytics: Anticipate where compliance gaps will emerge.
- Field verification: Human teams confirm planogram execution and shelf discipline.
McKinsey (2025) found that brands using AI + field execution reduce compliance penalties by 25-30%.
Implications for Mid-Market CPG Brands
For mid-sized suppliers, the Code offers both risk and reward:
- Reward: A level playing field reduces unfair pressure from dominant retailers.
- Risk: Those without strong compliance infrastructure may struggle to adapt.
The winners will be the brands that treat the Code not as a burden, but as a framework for competitive execution.
Canadian Consumer Perspective
Consumers won’t see the Code directly, but they’ll feel its effects. With stricter compliance, shoppers should experience fewer mispriced items, better on-shelf availability, and more consistent promotions.
Ipsos Canada (2025) reports that 68% of Canadians already distrust grocers over pricing and promotions. The Code provides an opportunity to rebuild that trust, if suppliers and retailers execute well.
Strategy for CPG Leaders in 2025
To succeed under the Grocery Code of Conduct, executives should:
- Invest in Real-Time Compliance Tools: AI-backed monitoring prevents costly penalties.
- Enhance Field Execution: National teams ensure planogram and pricing accuracy.
- Strengthen Retailer Partnerships: Transparency builds resilience in negotiations.
- Document Everything: From promotions to audits, data is now a compliance currency.
Conclusion: Compliance as a Competitive Advantage
The Canadian Grocery Code of Conduct represents a turning point for CPG shelf management in 2025. While it raises the bar for accountability, it also rewards the brands that can execute with precision.
In this new era, shelf discipline is no longer just best practice, it’s survival strategy. Visit www.marketsupport.ca for more information.
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