The North West Company Inc.: Changes in the North Means Cheaper Food

ARCTIC BAY, NUNAVUT--(Marketwire - March 31, 2011) -

Editors Note: There is a photo included with this release.

The cost of a basket of healthy food bought at most North West Company (TSX:NWF) stores, that are eligible for the Nutrition North Canada subsidies, will drop a minimum 5 percent making it the most significant decrease in food costs in northern Canada in recent history, The North West Company (NWC) announced today. The total annual cost savings to northern consumers is projected to be about $6 Million in the first year for eligible communities. Some consumers will see prices on some NNC items drop as much as 20 percent at their Northern and NorthMart stores.

For example:

• an Iceberg Lettuce will go down from $7.09 each to $5.25 each or 26 percent (Aklavik, Northwest Territories);
• a 10lb Red Potatoes will go down from $22.29 to $18.49 or 17 percent (Wasagamack, Manitoba);
• a 4-litre Lactania 2% jug of milk will go down from $15.99 to $14.49 or 9 percent (Arctic Bay, Nunavut);
• a Best Value 570g loaf of Whole Wheat bread will go down from $3.95 to $3.69 or 7 percent (Cambridge Bay, Nunavut);
• and a 3lb Red Delicious bag of apples will go down from $11.89 to $11.29 or 5 percent (Iqaluit, Nunavut)

"Shoppers can expect these and many other changes this week", Michael McMullen, Executive Vice-President Northern Canada Retail division of The North West Company, announced in Arctic Bay today.

"Shoppers coming to our Nutrition North Canada (NNC) eligible stores this week are going to see a lot of change. They will see a change in their food costs, which are down considerably. They will see store signs that clearly say which item prices are different and by how much. This transparency shows the subsidy at work, something that many of our customers have requested. Most importantly, they will get change back at the cash register for the same healthy basket of food they bought last month," said McMullen from the Northern store in Arctic Bay.

The North West Company launched its "Making Healthy Choices More Affordable" program in 65 of its Nutrition North eligible stores across Canada today. The program is created, in part, by changes in the federal government food subsidy program, Nutrition North Canada, and by greater efficiencies achieved by The North West Company, McMullen said.

"We work constantly to get more affordable food in the North. The changes we see today are possible because two important changes have occurred behind the scenes that benefit the consumer. The federal government has changed the food subsidy so that some communities see a greater subsidy. Secondly the retailers – like us, are now free to use a more direct, cost effective channel of distribution instead of having to use Canada Post as required by the government for decades. This means we will have less interruption and fewer delays in the transport of food, which means healthier fresh food. Once these changes came into place we were able to negotiate better freight rates with airlines and trucking firms because we have the advantage of bulk rates. Today those cost reductions have taken effect and are fully passed on to our customers," McMullen says.

"As the media and the markets have stated, unfortunately we are in an inflationary period with significant increases in oil, fuel and food commodity costs in Canada and globally. Fuel rider surcharges imposed by air freight companies have started to kick in," McMullen said adding that The North West Company advised the standing committee on Indian and Northern Affairs in December 2010, that the North is not immune to cost escalation and these realities will impact the North.

"Despite these market and economic realities we are able to deliver lower food costs in the North today. We will work hard in the future to offset, as much as possible, the cost pressures that we cannot control."

The federal government announced the Nutrition North Canada program last year with a mandate to only subsidize nutritional food. However, in March, it decided to continue to subsidize all foods and implement the nutritional mandate in October 2012.

"We believe in the mandate of Nutrition North Canada to make healthy foods affordable and we have directed all of our freight savings and efficiency gains into Nutrition North healthy food items," McMullen says.

"This is the first month of the new Nutrition North program and our own "Making Healthy Choices More Affordable" program and, we all still have lots to learn. We know, for example that there are some communities we serve that will not see enough change. That is because neither the federal subsidy nor the freight rates changed enough to equal a change at the cash register. We will keep working with the government, our customers and the leadership in northern communities to find solutions to issues like these as they arise," McMullen said.

Company Profile

The North West Company is a leading retailer of food and everyday products and services to rural communities and urban neighbourhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 230 stores under the trading names Northern, NorthMart, Giant Tiger, AC Value Center and Cost-U-Less and has annualized sales of approximately CDN$1.5 billion.

The North West Company is the largest local employer in Canada's North, with over 3,100 employees and an annual payroll exceeding $65 million. The North West Company is the largest private sector employer of Inuit and First Nations people in Canada. It has invested $271 million in capital in the 134 northern communities across Canada in infrastructure, inventory and other assets. North West purchases $34 million in goods and services in northern communities annually.

The common shares of The North West Company Inc. trade on the Toronto Stock Exchange under the symbol "NWF".

To learn more please visit www.northwest.ca or www.nutritionnorthcanada.ca

To view the photo included with this release, please visit the following link: http://www.marketwire.com/library/20110331-north800.jpg