The proposed $24.6 billion merger between Kroger and Albertsons could have dramatic consequences for customers, including higher prices for groceries and more food desserts, experts say.
The deal between two of the largest supermarket chains in the United States – which own brands such as Ralphs, Mariano’s, Fred Meyer, Safeway and Vons – would give the combined company control of almost a fifth of the US market for the grocery store, with approximately 5,000 stores. in 48 states. If the deal is approved by regulators, it is expected to close in 2024.
Store closures are a likely outcome since some neighborhoods have stores from both chains, said Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, a nonprofit that helps communities attract grocery stores and other services. “This merger is incredibly dangerous,” she said. “It is very likely that if this passes, it will result in more communities without grocery stores.”
Higher prices are another. Christine Bartholomew, a University at Buffalo law professor who previously practiced antitrust and consumer protection law, said price hikes have followed grocery store mergers before and the same pattern is likely after any merger. large grocery stores. One of the reasons is the loss of private labels or private labels which are generally cheaper than name brands, she said. Consolidation would mean fewer options.
“I’m deeply concerned about the consumer choice aspects,” Bartholomew said. “It might not seem like a big deal, but private labels are some of the most affordable brands.”
The merger comes as food prices rise precipitously — 11.2% from September 2021 to September 2022, according to the US Department of Agriculture — and several pandemic relief programs wind down, sending more of Americans in food banks to make ends meet.
Kroger Chief Executive Rodney McMullen told investors last week, “We will leverage the learnings of each company to bring greater value and a better experience to more customers, more associates and more communities. ” He also said in an interview following the deal that the company would “invest in pricing to ensure it can better stretch its budget.” The company also said the merger was necessary to compete with Walmart, Costco and Amazon, which bought Whole Foods in 2017.
This decision was also criticized by senators Bernie Sanders and Elizabeth Warren. “At a time when food prices are skyrocketing due to corporate greed, it would be an absolute disaster to allow Kroger, America’s 2nd largest grocery store, to merge with Albertsons, the 4th largest grocery store. of America. The Biden administration must reject this deal,” Sanders tweeted.
Warren tweeted“I call on the FTC to block this deal. Big grocery chains like Kroger and Albertsons are already gouging families with inflated prices. More mergers and less competition would mean even higher prices – and layoffs for employees.
The merger still faces some hurdles, including the removal of federal antitrust regulations and legal challenges, Bartholomew said.
But it’s part of a larger trend of supermarket consolidation in recent decades. A 2021 joint survey by the Guardian and Food & Water Watch found that consumers already had little choice when shopping, with just a handful of companies controlling the majority market share of almost 80% of everyday groceries such as breakfast cereals, canned vegetables and rice.
A subsequent Food & Water Watch report found that four companies made two-thirds of all grocery sales in 2019. Half of those sales were at Walmart.
The food industry also has many of the lowest-paying jobs in the country, so the Kroger-Albertsons deal could also have dire consequences for the company’s 710,000 employees and others who raise livestock. , grow produce, bake bread or work in any other business that supplies supermarkets.
“We strongly believe that the consolidation of food industries is what leads to the exploitation of workers,” said Suzanne Adely, co-director of the Food Chain Workers Alliance, a coalition of organizations representing more than 375,000 workers in the feed. “In the past, this has led to store closures and the loss of good jobs. This is something we know to be true of this kind of business race to consolidate.
Dan Gillotte, general manager of the Greenbelt Co-op in suburban Washington DC, said consolidation may also cause grocers to cut back on innovation that lowers prices and provides other benefits to shoppers.
“You’re trying to be smarter than the society on the corner,” he said. “If you own the business down the street, you don’t have to be so smart.”
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