grocerygoliaths

Grocery Goliaths: How Food Monopolies Impact Consumers

Last month, Food and Water Watch, a group that seeks to ensure that the food, water and fish we consume is safe, accessible and sustainably produced, released a report on concentration in the food industry.  The Executive Summary is posted below.  The full report is available here.

grocerygoliaths

 

Groceries are big business, with Americans spending $603 billion on grocery products in 2012. Big-box food retailers like Walmart and national grocery store chains now dominate the grocery industry. These mega-retailers are the biggest buyers of grocery products, and they exert tremendous power over food companies and ultimately farmers. This has led to a handful of food companies producing the majority of the products in the supermarket.

 

This growing consolidation of the food supply is severe at every step of the food chain, from farm to fork. And it impacts not only farmers and food manufacturers, but also consumers in the form of reduced consumer choices and higher grocery prices. Since the Great Recession started, grocery food prices rose more quickly than inflation and wages — twice as fast between 2010 and 2012. At the same time, the largest food, beverage and grocery retail companies pocketed $77 billion in profits in 2012. Nationally, the growing size and market power of the top grocery retailers has had tremendous ripple effects across the food chain. Food & Water Watch examined 100 types of grocery products and found that the top few companies dominated the sales of each grocery item in recent years.

 

Key Findings:

 

  • In 2012, more than half of the money that Americans spent on groceries (53.6 percent) went to the four largest retailers: Walmart, Kroger, Target and Safeway. Walmart alone sold nearly a third (28.8 percent) of all groceries in 2012.
  • The top companies controlled an average of 63.3 percent of the sales of 100 types of groceries (known as categories in industry jargon). In 32 of the grocery categories, four or fewer companies controlled at least 75 percent of the sales. In six categories, the top companies had more than 90 percent of the sales, including baby formula and microwave dinners.
  • Many firms sell multiple brands of the same product, which leads consumers to believe that they are choosing among competitors when they are actually just choosing among products made by the same firm that may have been made at the same factory. This is true across the board, including organic and healthful brands typically seen as independent, but which are being bought up by large food companies unbeknownst to consumers.
  • Supermarkets engage in a host of strategies to manipulate the shopping experience, encouraging consumers to make impulse and more expensive purchases that are unknown to consumers.
  • Regulators have largely left mega-retailers to operate unchecked as they invented new ways to extract value from consumers and even large food processors. It is time for regulators to step in to protect consumers and restore some semblance of competition for consumers in grocery stores, providing a chance for innovative, small or local food companies to get on store shelves.