Hello and welcome back to Top Five Friday Finds – the weekly series in which we share five of the business news stories that dominated the papers (and our conversations) this week.
Oh Canada! It’s Canada Day this weekend, and as citizens across the country prepare to celebrate our nation, the federal government will be preparing for more than just fireworks. This week Foreign Affairs Minister Chrystia Freeland unveiled a final list of $16.6-billion worth of American imports that will be hit by retaliatory tariffs – and the protectionist measures slated to take effect on our nation’s birthday. While reciprocal tariffs on steel and aluminum imports from the United States constitute a significant portion of planned tariffs, other items – ranging from ketchup to toilet paper- will be slapped with a 10% duty. While the hope is that Canada’s imposed trade barriers will signal an unwillingness to accept “bullying” from our larger neighbour to the south, many are concerned the United States won’t take the retaliation lightly, and will instead snap back with additional trade actions. Whatever may come, the Canadian government has shown every intent to wait the war out. In addition to the finalized list of tariffed products, the Liberal government announced a financial aid package on Friday that will supply industries and workers involved in significantly impacted sectors (aka steel, aluminum and manufacturing) with up to $2-billion in funding and loans.
Canada is rapidly heading towards the legalization of recreational marijuana (October 17 is slated to be the official date on which Canadians will be able to legally purchase and consume cannabis), leaving many industries wondering how the new product will change their business. One such industry? Alcohol – a sector that many say may see a downturn in demand as consumers turn to “substitute social lubricants”. So how can alcohol companies minimize the impact of legalization? Well, if you’re iconic Canadian beer brand Molson Coors, it looks like the answer might be to invest in the industry by acquiring a cannabis company. This week an insider at Molson Coors Brewing Co. tipped off news sources that the company has been in talks with several Canadian-based cannabis companies including Aphria Inc., and Aurora Cannabis Inc. While nothing is finalized, the talks are said to be serious, with the company hoping to enter the cannabis sector before the end of the year. While Coors is perhaps the largest (and most iconic) Canadian alcohol brand to consider branching out into cannabis, it is far from alone in its pursuit. Constellation Brands Inc. took on a 9.9% stake in Canopy Growth Corp. back in October 2017 for $245-million, while Southern Glazier’s Wine & Spirits LLC announced a partnership with Aphria back in May.
Let’s carry on our conversation by talking about another controversial consumer good – bread. On Thursday, Justice Lynn Ratushny of the Ontario Superior Court released a series of documents that set out the Competition Bureau’s allegations against the country’s grocery chains.The product at the heart of the allegations? Bread – which the Bureau says was artificially priced for more than a decade. While the first allegations of price fixing were released back in early-2018, information released this week provided additional clarity surrounding what was going on within the industry, and identified a specific anonymous individual – known merely as ‘Person X’ – as the catalyst of the controversy. According to the Bureau Person X, an employee of Canada Bread, first suggested that Canada’s grocers should work in concert to gradually increase prices over time. The allegations go on to say that Person X than suggested a cooperative plan among Canada’s grocers, even so far as to offer to meet with various retailers in the hopes of creating a unified front. None of the Bureau’s claims have been substantiated in court, and for the time being ‘Person X’ remains an anonymous figure. With that said Thursday’s release provides a much needed update on one of the more controversial business events of 2018, and provides onlookers with additional insight into the future of ‘breadgate’.
Amazon has gradually grown from mere company, to an essential part of everyday life. What started as an online bookseller has gradually morphed into a digital department store, grocery store (remember the company’s Whole Foods acquisition?), and – as of this week – pharmacy. On Thursday Amazon announced plans to purchase pharmacy startup PillPack – an online, full-service pharmacy that seeks to “combine convenient packaging, modern technology, and personalized services” to revolutionize healthcare. Following the $1-billion announcement shares in Walgreens, CVS and Rite Aid almost immediately dropped, with the three companies losing a combined $15-billion in market capital. While the three company’s stocks will likely rebound, the market’s reaction shows just how significant a role Amazon can play in an industry. In a sector still dominated by brick-and-morter stores, digital competition is scarce. Clearly North America’s pharmacies will need to brace themselves for online competition.
And finally, an update on the latest activity at the House of Mouse. On Wednesday Disney won antitrust approval for its proposed takeover of 21st Century Fox Inc., meaning that the $71.3 billion offer we reported on last week will likely be approved. To recap, last week Disney announced a proposed takeover bid for the multinational mass media corporation, shoving aside a smaller offer from Comcast in the process. The Department of Justice’s support has been accepted by the market as yet further proof that Fox and Disney belong together, and while Disney must sell off 22 regional sports networks to secure final approval, both company’s seem amenable to the caveat. Fox’s shareholders are set to vote on the transaction on July 27, and while Comcast still has time to announce a competing bid, onlookers seem sceptical that the company will choose to launch a comparable competing offer.