How Inflation Made Public Groceries Inevitable. (Extended Version With Citations)

Errol Schweizer

Introduction: Inflation Accomplished

Unintentionally doing his best GW Bush “mission accomplished” shtick, sans aircraft carrier, President Donald Trump recently declared that he’s “already solved inflation”, that “costs are down” and ”We have almost no inflation anymore.”

Leaving aside the obvious to anyone who buys food, that all of these statements were inaccurate, typically Trumpian hyperbole, they were consistent with Trump’s 2024 presidential campaign braggadacio that tapped a motherload of voter anxiety about Biden economics. “Starting the day I take the oath of office, I will rapidly drive prices down and we will make America affordable again. We’re going to make it affordable again.”

But there is no art of the deal for Trump to charm food prices back down. His reversal of reciprocal tariffs may slow their overall assent, and definitely won’t help his reputation for “TACO”. The Trump economy is now even more unaffordable than his predecessor’s. Trump not only does not have a plan to bring prices down, but his policies are actively driving them up. If there are policy solutions to make food affordable again, they won’t be found in the Trump White House. But they exist, and they work.

1-Inflation Reigns.

Inflation, or the annual rate of price increases, is still in the low single digits and has slowed down considerably since peaking in 2022. During the Biden-Harris years, policymakers sat on their hands as food prices soared, delegating price stability to the Federal Reserve Bank. The Fed raised interest rates in several tranches, creating crushing household debt burdens for working people in a painful attempt to slow demand and stabilize the labor market, the gentleman’s way of saying “discipline the workforce”. This all came down just as pandemic-era benefits dried up, all while liberal pundits scolded inflation-weary consumers for complaining “vibeflation” and creating a “vibecession”. Bidenomics, despite some decent efforts around antitrust, industrial policy and corporate concentration, was not pleasant for working people, and that reflected at the polls in 2024.

Now nearly a year into office, it is getting harder for President Trump to pass the pricing buck to Biden-era policies. With prices heating up under his watch, Trump is far from the first president to break campaign promises once getting into office. But his self-absorbtion misses the bigger picture, one that is self-evident to anyone who works for a living and has to stretch that paycheck thinner and thinner every week for all of life’s necessities.

Everything is so damned expensive now.

2-Inflation Over Gross Margin.

Compared to 2021, food prices are up 25%, according to data provided by NIQ, whose syndicated data is used across the food industry to track pricing and product trends. The total units sold, on the other hand, are down 5%. In total, grocers sold over 13 billion units less than in 2021, a massive realignment of demand elasticity, not even adjusted for population. Grocery industry sales jumped almost $225 billion since the pandemic ended, but that growth is all price inflation. People are buying less food. A lot less.

This is a consistent pattern. Grocery prices outpaced the rate of inflation by several points from 2021-2023, with the gap actually growing as the CPI cooled off.

When we look further back to the pre-pandemic days of 2019, grocery prices are up over 35%. The top 10 most consumed categories, including beef, soft drinks, eggs, milk, salty snacks and coffee, have experienced an average price increase of 60% since 2019, with a 1.3% decline in unit volume. The top 25 items are up 44%, the top 100, up 36%.

What does this mean for weekly shopping trips? In 2019, a basket of the top 10 items cost $36. In 2025, $56. In 2019, a basket of the top 25 items cost $101, in 2025, $139.

In 2019, a basket of items I would buy regularly for my big monthly stock the pantry grocery shopping trip would cost $196 in NIQ data. In 2025, the same items jumped to $273, a 40% increase.

This also means that the increase in prices since 2019 is equal to or greater than the cost of doing business for most grocery stores. Grocery stores’ gross margins, are more or less the markups they take on their wholesale costs, that enable them to keep the lights on and pay for employees, rent, utilities, and taxes, and a profit margin typically ranging from 1-5%. Gross margins range from @22% for Kroger or Walmart to 36-40% for Sprouts or Whole Foods. Many convenience stores and neighborhood markets need margins of over 40% to stay in business, and typically deal with higher wholesale costs because they don’t have the negotiation leverage or advantages of scale that bigger, dominant chains enjoy due to predatory pricing and payment practices, weak antitrust regulations and massive supply chains.

In order to bring consumer prices down to 2019 levels, grocers would have to sell everything at or below their wholesale costs. The biggest mass merchant and discount grocers would be the deepest in the red, since their price increases since 2019 have been much larger than their gross margins needed to operate.

Retailers are now working harder to sell less product. They are introducing more everyday low price private labels, selectively lowering some prices and marketing the hell out of that while raising prices on “rest of store” items to make up for the markdown expenses. Or they are increasing chargebacks, fees and markdown requirements from suppliers, putting more stuff on sale, and using AI to “optimize” pricing and target specific offers and deals to price-wary customers.

But when it comes to affordability, especially compared to prices from just a few years ago, this is all just rearranging deck chairs. The grocery business, in its current incarnation and margin model, can’t solve the affordability crisis.

And so, prices still keep going up.

3-Raining Inflation.

While inflation is not as hot as 2021 and 2022, it hasn’t gone away. There are a lot of reasons for recent price increases. Beef prices went up 14% from January to August 2025 because the beef cattle herd is the smallest in 75 years, in part because of drought. Meat industry consolidation hasn’t helped that either. The price of coffee has gone up 21% in 2025 compared to 2024, because Brazilian imports like coffee began facing 50% tariffs last month, part of the Trump trade war. Vegetables had an increase of 38.9% from June to July 2025. Apple prices increased 9.6% from September 2024 to September 2025 and 26% since 2019. Tomato prices have started to jump after the end of a 30 year U.S.-Mexico trade agreement, up 4.5% after they began facing 17% tariffs in July. Wholesale vegetable prices jumped by 47% in August alone. In California’s Oxnard region, intensified ICE activity has slashed agricultural labor by 20-40%, leading to $3-7 billion in crop losses. Trump’s own Department of Labor is warning that the crackdown on immigration is creating a labor crunch in the fields that threatens the food supply. Yale Budget Lab’s estimated in August that consumers face an effective tariff rate of 18.6% that may cost them thousands of dollars a year in higher food prices. Other cost pressures will include Avian flu, plant diseases such as citrus greening, climate change and weather-related disasters and continued war and instability. Manufacturers now face rising raw material, labor, and energy costs in addition to erratic trade policy. Wholesaler and retailers have added supplier-facing service, data, operational and promotional fees, in addition to the usual avalanche of discount, rebate, chargeback, deduction, slotting and activation fees they charge suppliers, variable costs that just end up flowing downstream to end consumers. Mass market retailers, who particularly benefited from the media hysteria of inflation from 2021-2024 to post record profits, are being very circumspect about how much of that inflation they can pass through or skim extra margin off of, lest they hemorrhage shoppers. None of these macro, real-life factors will bring food prices down even a little, let alone to 2019 levels. Line just goes up.

And believing that Trump economic policies can tame inflation is akin to saying that Trump trade, food and agricultural policies, like not pursuing an antitrust case against Pepsico, cutting food safety staff, food safety surveillance programs and regular inspections of domestic facilities and imports, holding SNAP funding hostage as a bargaining chip to raise healthcare premiums, cutting regional and local food purchasing programs, cutting charitable food donations and no longer measuring food insecurity, as well as cutting SNAP-ED, will all make American healthy again. These policies are not fit for purpose. They will do the opposite of what they promise.

And meanwhile, prices keep going up.

4-Inflation Fatigue.

Not surprisingly, inflation is rated as the biggest risk to the US economy by a majority of Americans, whose monthly costs have already risen by between $100 and $749; 74% of those surveyed said they had seen increases of at least $100. More than half of Americans believe the economy is worsening. The CEO of GoFundMe said the economy is so bad that people are crowdfunding to pay for groceries. Nearly 90% of U.S. adults are stressed about grocery prices—with half calling it a major stressor. The CEO of snack and confection giant Mondelez International, who bragged about raising prices to boost earnings in investor calls from 2022-2023, now says consumers have “no inclination to increase their spending”.

The warning signs during the close of the Biden years were clear. In 2024, up to 4 out of 5 consumers believed that “greedflation” was rampant. Consumers were citing food prices as their number one economic concern, 94% were worried about food prices. Share of income spent on food increased to 13% in 2022 and has only grown since the end of pandemic-era benefits. Two thirds of consumers were spending significantly more on groceries. US household purchasing power slipped 7% in the first half of 2023. Over 70 percent of Americans were financially stressed, with 58% living paycheck to paycheck. Food insecurity impacted 27 million Americans in 2023, a number that has now crested 47 million. More than 40 million people fell below the poverty line in 2022 alone. In 2023, very much middle of the road market research firm Dunnhumby pulled no punches reporting that, “our research has also shown that 18-44 year-olds are at the epicenter of a food and financial insecurity crisis that shows no signs of abating.” Bidenomics ended with the economy landing softly on the backs of the working poor.

Now, almost a year into the second Trump Administration, over 6 in 10 Americans are “extremely” or “very” concerned with the price of groceries. Two thirds of Americans disapprove of Republican tariffs and less than 22% think that a crackdown on illegal immigration is a priority. Rising grocery costs are forcing 45% of Virginia families into debt, with the burden weighing even heavier on households with school-age children. 86% of consumers now buy more private-label products, with price cited as the primary decision factor; 42% opt for cheaper alternatives; while 20% skip items altogether. 61% of supermarket shoppers use sale-driven habits—buying on promotion, eating more at home, and choosing store brands over national names, while one-third still prioritized lowest-priced options.

According to Steve Hoffman, a longtime grocery marketer and journalist, “For lower income individuals and families, higher food prices are resulting in less consumption of healthier food options, with the result that Americans are not eating enough fruits, vegetables, and other nutrient-dense foods. Instead, they are choosing sugary and ultra-processed foods, which tend to be cheaper and last longer… inflation continues to shape food choices (and) increase the risk of chronic diseases such as diabetes, heart disease and obesity.”

And relentlessly, prices keep going up.

5-Market Concentration and Pricing Power.

Inflation did not come out of nowhere. Nor was it the result of pandemic benefits giving consumers enough chump change to eat regularly, or government spending “overheating” the economy, or so neoliberal economic dogma would have us believe. Inflation was not inevitable.

Over the last 5 years, market consolidation and the resulting profiteering had been the biggest driver of both price inflation and the resulting decline in food consumption. Market dominance gave leading firms the ability to dictate pricing and supply across the categories or market segments that they dominate. They could then extract enormous profits, especially during times of crisis or instability like the Covid-19 pandemic or Russian invasion of Ukraine.

Professor Isabella Weber explained in 2022, “that supply shocks allowed corporations to tacitly collude, hike prices, and rake in record profits…This is a form of implicit collusion,” she said. “Firms do not even need to talk to one another to know that a cost shock is a great time to raise prices.”

Alex Turnbull, a commodities analyst, echoed this, “When you go from 15 to 10 companies, not much changes. When you go from 10 to 6, a lot changes. But when you go from 6 to 4 – it’s a fix.”

In retail, the top 6 grocery chains control 65% of grocery share nationally, the top 4 over 50%. Walmart. Kroger. Albertsons. Ahold-Delhaize (i.e. Stop&Shop, Food Lion). Walmart alone has over 60% market sharein dozens of metro areas.

In Portland and Seattle, the top 2 chains, Kroger and Albertsons, control 50% of sales. In Chicago, the top 3 chains control 50%, and in Southern California, the top 2 control 40%. In Detroit, Atlanta, Dallas, Arizona and Denver, the top 3 grocers control 60%. In Austin, the top 2 control 75% share. In all cases, Walmart, Kroger and or/Albertsons are in the #1 or #3 spots. 

On grocery shelves, most categories are also dominated by a handful of market leaders, with four or fewer corporations controlling 60-85% of meat processing, 93% of soda sales, 80% of candy, 75% of yogurt, 72% of breakfast cereals, 60% of snack bars, 66% of frozen pizza, 60% of bread, 80% of toothpaste and 80% of toilet paper sales. It is no exaggeration to say that the grocery industry is dominated by food and beverage cartels.

And so, inevitably, prices keep going up.

6-Supply Shocks, Demand Craters.

How did this play out over the last five years? In 2020, the Covid-19 pandemic, the ensuing lockdown, and shutdown of the food service sector led to a brief spike in demand on grocery products. That demand spike tailed off as the economy opened back up, but it did temporarily disrupt replenishment and forecasting models, especially for large scale supply chains that were built on “just in time” logistics that kept inventories low to please finance wonks and institutional shareholders, supply lines that counted on frequent, consistent order patterns. It took a few months to recover from these shocks. But it doesn’t explain what happened next. Consumption trends and price increases after 2021 tell a story of pricing and demand that is far different than what economists would typically use to explain inflation. Covid-19 not only broke supply chains, it broke economic dogma, proving nearly every mainstream, liberal and conservative economist dead wrong about the causes of inflation.

Since 2021:

Beef prices are up 40% and volumes are down 12%. Chicken prices are up 27% and volumes are up just 1.7% Meat prices in total are up nearly 30% and volumes are down 8%. Beef, pork and poultry prices made up the largest chunk of price increase in late 2021 and early 2022, when prices spiked the most quickly. Four conglomerates control up to 85% of these markets and in that same timeframe, their profits surged by 120% and net income by 500%. In 2021, JBS passed 17% higher prices onto consumers, and even though volumes decreased, posted a 345% net income increase.

Tyson Foods doubled its profits from 2021-2022, dryly stating in an earnings call, “Our pricing actions, which partially offset the higher input costs, led to higher sales during the quarter.” The Big 4 meat processors paid out over $4 billion in shareholder dividends in the first 2 years of the Covid-19 pandemic. Meat monopolies perfected their highly extractive business model; underpay workers, underpay ranchers and pass through higher costs to downstream consumers. It worked brilliantly for shareholders.

Soft drink prices are up 46% and volumes are down .59%. The top 3 companies control over 80% of the marketplace, Coke, Pepsi, Dr. Pepper/Snapple, with the top two firms controlling over 50% share in many metro areas. As the CEO of Pepsico bragged in an earnings call in 2023,  “I still think we're capable of taking whatever pricing we need.”

Condiment prices are up 30% and volumes are down 6%. The top 5 firms control over 52% market share in ketchup, mayo, marinades, the literal ketchup cartel. In 2023, the CEO of Kraft Heinz explained, “We’ve already increased the prices that we were expecting [to] this year, but I’m predicting that next year, inflation will continue, and as a consequence [we] will have other rounds of price increases… We have executed a new price increase in the month of August. And the elasticities turned out to be stronger than what is anticipated.” Well, they are no longer.

Chocolate prices are up 40% and volumes are down 9%. The top 3, including Hershey, Mars and Mondelez, have almost 30% market share, and this doesn’t include upstream commodity dealers and processors like Callebault, ADM, Blommers and Cargill whose brand names don’t end up in consumer data. As the CEO of Mondelez explained on an earnings call in 2023,: “Year-to-date, we have delivered nearly $900 million in absolute gross profit dollar growth, a record high for our business, $3.3 billion to shareholders year-to-date through share repurchases and dividends. We also expect a significant contribution from pricing, and we continue to plan for double-digit cost inflation. We've announced a third round of pricing in the U.S… we still expect significant inflation in '23 and hence, the pricing rounds we have to go through.” And they went through, again and again.

Bread prices are up 25% and unit volumes are flat. The top 5 brands have 48% market share, with private label at almost 25%. Two conglomerates, Flower Foods and Bimbo Bakeries, own a myriad of household brands like Wonder, Nature’s Own, Dave’s Killer Bread, Thomas’, Sara Lee and Arnold’s.

Salty snacks, like potato chips and tortilla chips, saw unit volumes flatline and prices up 27%. The top 5 brands have over 33% market share. Pepsico/Frito Lay alone controls more than 50% snack market share in dozens of metro areas through its vertically integrated manufacturing and direct service delivery operations, through contract growing, processing, distributing and stocking its own products on ubiquitously vast swathes of store shelf space managed by delivery drivers.

Egg prices are up 130%, including 45% in one year, and volumes are down 1.37%, due to avian flu, pullet supply constraints from grower market concentration, and the ensuing record profits from market leader United Egg Producers.

Coffee prices are up 28% and volumes are down 9%. The top 5 brands have over 53% market share. It’s not just tariffs driving up prices.

Cookie and cracker prices are up 33%, cookies are down in volume 8% and crackers down 16%. The top 5 cookie and cracker brands control almost 70% of the marketplace, with top 2 at over 50%, a snack duopoly, a biscuit cartel.

Cereal prices are up 27% and volumes are down 12%. The top 3 control over 50%, including General Mills, Posts and Kellogg’s, now owned by confectioner Ferrero. “It’s been surprising how resilient the consumer really is,” stated Kellogg’s Chief Executive Steve Cahillane in 2022. That consumer is no longer so resilient.

Lunchmeat prices are up 23% and volumes are down 12%, the top 5 brands have over 65% share and the top 3 over 50%.

Frozen pizza prices are up 24% and units are down 8%, with the top 5 brands having over 60% share.

Greek yogurt prices are up 41% and, against trend, volumes are up 13%. Yogurt prices overall are up 41% and volumes are up 3.6%, with traditional yogurt volumes down 7%. The top 5 yogurt brands control almost 60% share, and the top 3 brands over 40%, which will now be 2 brands now that General Mills is unloading Yoplait to Lactalis.

And in 2022, the 4 companies who control 70% of French fry production, (Lamb Weston, Simplot, McCain and Cavendish) raised prices within a week of each other. French fry and tater tot prices have increased by 56% since 2019.

And, so, inexorably, prices keep going up.

7-Profit Inflation.

As an example of how this happened, in real time, in July 2021, Pepsico announced its first major price increase of 5%, enabling $8 billion in net income and over $5 billion in shareholder dividends by early 2022. Coca-Cola soon raised prices, leading to a 15% net income increase from 2020-2021. Pepsico then increased prices again and again. In 2023 Pepsico took in $91 billion in revenue, up 35% since 2019, while repurchasing $7.7 billion in stock. The price hikes continued throughout 2022, with Coca-Cola, Hershey’s, Pepsico and Mondelez surpassing earnings forecasts by passing along customer prices that were marked up over the costs increases they were navigating.  Mondelez profits increased by $800 million and issued $4 billion in shareholder payouts. General Mills increased prices 5 times in 2021-2022, and Q4 2022 profits increased 97% to $823 million with $2 billion in shareholder payouts.  The CEOs of Pepsico, Mondelez, Conagra, Kellanova and Kraft-Heinz all bragged to shareholders again and again that they were able to raise prices to boost revenues, surprised by consumer “resilience”.

It wasn’t just the manufacturers. Retailers were also navigating higher supply side costs, and instead of absorbing cost shocks or just passing them through to consumers, there are ample examples to show that leading retailers used the opportunity to raise consumer prices above the rate of producer cost increases. From April 2019 to summer 2022 Walmart raised thousands of prices on a cost-per-ounce basis, including Great Value potato chips by 35%, Pepperidge Farms Cookies by 62% and Great Value Yogurt Cups by 93%. Albertsons is the third largest U.S. grocery chain and at select Albertsons stores in the same timeframe, a basket of like items on a cost-per-ounce basis jumped by over 75%, including private label Signature Vegetable oils up 117%, Signature Potato Chips up 68%, and Lucerne Cheese up 125%. On the stand testifying under oath during their Albertsons merger FTC trial, Kroger executives admitted to raising milk and egg retail prices above the rate of cost inflation. Executives complained this data was cherry picked, but it conflicts with basic category management: skimming incremental margin off of key value items like milk and eggs is not an everyday pricing strategy to keep customers coming back. It is opportunistic and predatory.

As economist Isabella Weber explained in 2022, “Outsize price hikes are at least partially responsible for inflation. Companies have bragged about how they have managed to be ahead of the inflation curve, how they have managed to jack up prices more than their costs and as a result have delivered these record profits.”

And so, in 2021, food company profits growth outpaced wage growth by 671% at Albertsons, 333% at Amazon, 83% at Keurig-Dr.Pepper and 55% at ADM. Stock buybacks as a percent of profit were 38% at Walmart, 52% at Target, 117% at Dollar General and 50% at Kroger. Between 2019 and 2024, Kroger’s net income and operating income grew by over 92 percent and 99 percent, and Albertsons’ net income and operating income grew by over 108 percent and 122 percent. And from 2018 and 2022, Kroger and Albertsons took a combined $15.8 billion in cash out of their businesses and sent it to shareholders in the form of stock dividends and buybacks. 

Likewise, profits outpaced revenues by 17 times at Albertsons, 4.5 times at Kroger and 3.5 times at Target, while CEO pay topped nearly 1000 times the average employee compensation. Stock buybacks as a percent of profit were 38% at Walmart, 52% at Target, 117% at Dollar General and 50% at Kroger. If such profits had been given back to employees, it would have meant annual pay raises for every employee at Dollar General of 112%, Target, 50%, Walmart, 18%, and Kroger, 12%. 

If Walmart, the largest private sector employer, were to give all of its employees a living wage, it would only have taken 2/3rd of the company’s profits posted in the 12 months prior to Q3 2021.

The top 10 retailers increased their combined profits by over $10 billion from 2021-2022 and issued over $15 billion in shareholder buybacks.

CEO pay at these companies averaged over $22 million apiece, nearly 1000 times the average employee annual earnings. Not surprisingly, many of these same food companies pay much of their workforce far less than a living wage. In 2022, 75% of Kroger workers reported being food insecure, 14% experienced homelessness. More than four-fifths of surveyed workers at Albertsons and Kroger were unable to pay basic living costs and more than two-thirds do not have secure housing, while more than nine out of ten workers reported price gouging.

Profits in 2023, at the height of price inflation, at Walmart were $15 billion, for Nestle, $13 billion, for Coca Cola, $10 billion, Pepsi, $9 billion, Unilever, $8 billion, Mondelez, $5 billion and Kroger, $2 billion.

A March 2024 report by the Federal Trade Commission noted that market leading food and beverage retailers saw their revenues outpace their costs by more than 6% in 2021 and 7% in 2023. Typical grocery profit margins are in the 1-3% range.

It wasn’t just food companies. Major oil companies posted $46 billion in earnings in Q2. 2021 profits exceeded over $75 billion at Shell, Chevron, BP and Exxon, enabling $6.6 billion in stock buybacks. Shipping conglomerates are had record profits in 2021 and 80% of global merchandise uses the Big 3 shipping alliances. And the 5 largest railroad freight lines increased operating margins by over a third in the last 6 years as they cut their workforce by 29%. Just 4 companies control 70% of the global grain trade. 2021 was Cargill’s most profitable year ever, with almost $5 billion in net income and up to a 70 basis point increase in margins. The other top grain traders, including Archers-Daniels-Midland, Bunge and Dreyfus also saw record sales growth and profits due to rampant speculation in early 2022. 

Profit margins crested at 15.5% in 2022, the most profitable year since 1950, while corporations issued more than $300 billion in stock buybacks to institutional shareholders. It is no wonder there is an $80 trillion income gap for the bottom 90% of workers since 1975.

The result? Shareholder wealth grew by 57 times as much as worker wages. Worker wages flatlined relative to inflation, as the price of goods outstripped hard won pandemic-era raises and cost of living increases while labor productivity outpaced compensation by over 25%.

The European Central Bank, the OECD and the European Commission all published studies on how profits were driving inflation, it was not a fringe theory in business and finance circles. Going one step further, the International Monetary Fund linked corporate profits to 40% of price inflation, while the Groundwork Collaborative and the Economic Policy Institute documented that over 53% of price increases from 2020-2022 were driven by profit gains, with wage increases responsible for under 8%, debunking yet more economic dogma on inflation.

These profits fed the price increases that consumers are still paying today, and every day, day after day, shopping trip after shopping trip. In other words, stealing from cash strapped consumers by raising prices above the rate of cost hikes, to pay for that vacation home, that yacht, that private jet, that Robin Hood in reverse, that consumers are still paying for with each visit to the grocery store.

This was systemic. Market dominating companies raised prices, generated profits that were redistributed back to shareholders as dividends and buybacks, spurring higher stock prices, and Wall Street rewarding profiteering in what economists called a “price profit spiral”, where shareholders favored conglomerates with large market share because they are able to both raise prices and retain customers:

“Firms increased their markups substantially in 2021, both to their highest level and with the largest single-year increase since 1955. Firm profitability, both before and after taxes, also increased to its highest levels… a phenomenon that could be described as a price-profit spiral. The decision-makers in publicly traded firms are sensitive to shareholder pressure to consistently meet short-term earnings expectations and to distribute large proportions of these earnings in share repurchases and dividends. In an inflationary environment, firms that enjoy the discretion and power to adjust markups are more attractive to financial analysts and asset managers.” 

This isn’t a new phenomenon. In the 18th century, Adam Smith observed, “High profits tend much more to raise the price of work than high wages. Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price. … They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” 

And it’s no wonder that despite an otherwise milquetoast campaign platform, the Harris ban on price gouging was still popular, with 45% of Americans saying it would strengthen the economy. Over 80% of voters wanted lawmakers to crack down on corporate price gouging.

Those heady days of retailers skimming margin off price increased are now long gone, with Arun Sundaram, an analyst with CFRA Research, noting as far back as 2022 that  “Food retailers are operating in probably one of the best operating environments for them in modern history. We think that the best times are probably behind [for them], and that things are going to get much more challenging down the road, especially as food inflation moderates, food-at-home demand moderates and competition continues to increase.”

And so, prices kept going up. Consumption plummeted. Food insecurity skyrocketed.

8-Inflation Hangover.

And now, many of those processed food and beverage conglomerates are facing the worst post-profiteering hangover in decades. Consumers have not only been buying less of their products, but have shifted to lower priced private labels or smaller, more premium brands with a focus on sustainability, DEI and family ownership, eco-friendliness or special dietary needs. Consumer tides have shifted to demand companies behave more responsibly, even if consumers can’t really afford that and that demand is materially and structurally impossible for most corporations. Yet study after study shows that is what the growing share of younger consumers expect and are not getting from the food giants. They want better products but have less money to buy food and they are taking their money elsewhere. The results?

Mars swallowed Kellanova, Ferrero consumed Kellogg’s, Smuckers snacked on Hostess, Hershey expanded its snack portfolio with Lesser Evil, whose scion, known by his online nickname “Big Balls”, briefly worked for DOGE and was assaulted in downtown Washington DC, precipitating Trump sending in the National Guard to “restore order”. Meanwhile, Cambells feasted on Sovos (Rao’s), Celsius chugged Alani energy drinks, Kraft Heinz disaggregated into more category focused monopolies, General Mills gave up its U.S. yogurt monopoly to the French yogurt monopoly Lactalis, Flower Foods acquired Simple Mills, Pepsico bought Siete Foods and Poppi, and while closing Frito Lay and Pepsi manufacturing facilities due to declining consumption volumes, just three years after gloating about how easy it was to raise prices. General Mills, Amazon and Target laid off thousands, the chickens coming home to roost for years of price over volume profiteering at the expense of consumers and their workforce.

9-Inflation Slayers.

The crisis in the grocery industry starts with market concentration and the price gouging and profiteering it enables, and ends with prices out of reach of consumers, so much that demand has cratered by 5% since 2021. In the crossfire are independent and regional grocers who cannot control supply and pricing, as well as both white collar and rank and file workers, and, of course, cash-strapped consumers.

In order to address market concentration and make food affordable again, these problems require different policy solutions.

Regulators can start by enforcing the Robinson-Patman Act (RPA) a key antitrust law that has been ignored for decades. Robinson Patman enforcement could ensure a more fair and diversified market for workers, suppliers, consumers and the many independent and regional grocers by policing how bigger chains demand better deals, fill rates and payment terms at the expense of competitors. The largest grocers were able to expand due to decades of lax antitrust enforcement where they were able to get away with predatory pricing tactics and restrictive lease covenants that boxed out competitors and unrestrained mergers and acquisitions that hit a brief pause when the FTC managed to stop Kroger from acquiring Albertsons. The current retail grocery market share is the end result of this, and not a natural functioning of competitive markets.

RPA supporters also believe that the preferential pricing received by retail market leaders drives prices up for the rest of the marketplace, a phenomenon called price discrimination, as well as the Waterbed Effect. The idea is that if RPA were enforced, indies banding together as cooperatives would get fair pricing, big box competitors would not get artificially lower prices than competitors, prices would even out, and independents would be able to bring costs and therefore retail prices down, while market leaders (like Walmart) could no longer receive favorable pricing and would likely see costs rise. It is a likely theory, but has not been modeled at the category or retail sector level to see what the granular impact on pricing would be. Whether or not it could be leveraged to the extent that prices would drop below the five year rate of inflation of 35% is not likely. So RPA is primarily useful for addressing market power, outlawing price discrimination and pricing power imbalances, which are all quite necessary, with some knock on benefits of enabling more diverse ownership models to survive and flourish, all while kneecapping the bullying buying power of market leaders. RPA is just a starting point. Regardless, thousands of independent and cooperative grocers have seen their costs rise, their market share squeezed, and enforcing antitrust laws could be a start in leveling the playing field.

But it won’t solve for affordability.

A next step could be something like the Emergency Price Stabilization Act, first introduced by former Congressman Jamaal Bowman in 2022. This would have tackled supply side price hikes and recommended the use of price controls to limit price increases in key goods and services. This would dovetail with a price gouging ban such as that proposed by the Harris-Walz campaign in 2024. This ban would have enabled a “crack down on unfair mergers and acquisitions that give big food corporations the power to jack up food and grocery prices”. It did not call for price controls, but just connected the dots between price spikes and concentration, that “extreme consolidation in the food industry has led to higher prices that account for a large part of higher grocery bills”, and was of a piece of some of the awakened antitrust sentiment and activity at the Biden-era , CFPB, FTC and DOJ. Most Americans already live in states that have such emergency price gouging bans in place, like Texas, California and New York. But only state attorneys general have the power to take action, and they have limited reach. A federal ban would have supercharged such enforcement by funding more FTC oversight.

But while a price gouging ban could stop things from getting worse, and antitrust activity could address market share and pricing power, they still does not solve for affordability.

There are only two types of policies that can solve for affordability.

The first is SNAP, or federal food subsidies. SNAP currently accounts for about 9% of grocery industry revenue, or $100 billion a year. But strict means testing has made the program divisive and ineffective at preventing food insecurity. Despite 42 million Americans on SNAP, over 47 million Americans are still going to bed hungry or not getting enough nutritious food. Current SNAP benefits add up to $190 a month for an individual and $351 for a family of four, not enough anywhere in the U.S. for a nutrient dense, healthy, nourishing and enjoyable diet.

The solution, 180 degrees removed from Republican brinksmanship to defund the program, would be to supercharge SNAP. First, make all fresh produce free. Universal free produce. This would be about $90 billion a year in retail price subsidies, based on current fresh produce national sales volumes. Next, subsidize the difference in total retail prices between 2019 and 2025. This would be about $225 billion. All in, this adds up to about $400 billion, or another way to look at it, it is only the difference in defense spending between 2015 and 2025. Meaning that if the U.S. was able to find $400 billion more for “national security” over the last 10 years, it is a fair ask to find the same for food security.

Over 83% of Americans think that food should be a human right. SNAP spending has the added benefit of being an economic engine, its impact multiplying throughout the economy, with each dollar of SNAP generating another $1.50 in economic impact. Plus, SNAP dollars filter through the grocery industry and would be a huge sales boon across the board, generating job growth and justifying wage growth. Combined with a living wage adjustment of the federal minimum wage, such food subsidies could spur demand and reduce food insecurity, as well as taking the pressure off food banks and the food donation complex which has been strained by increased demand on its services.

As researcher Ken Kolb stated in Retail Inequality, “Instead of supply-side solutions that subsidize businesses, we should use those funds to improve the buying power of community members”.

The other major lever could be a national push for a public grocery sector,. Public grocery hit the mainstream with Zohran Mamdani’s successful mayoral campaign in New York City. The good news is, it already exists at scale, in the U.S. military commissary system.

10-Public Groceries At Scale.

The military commissary system uses a cost plus 2% markup, and fully funds the gross margin of retail operations so that retail prices are 20-30% lower than grocery prices. The military commissary generates over $5.6 billion in annual sales and leverages the large scale buying power of over 120 locations to ensure low wholesale costs, stocked shelves and a great selection. This is the only enterprise model that addresses the gross margin to food price inflation gap head on.

The commissary system is well-loved by U.S. servicemembers, who will live near bases to shop there even after they retire. A longtime friend of mine, an army officer and veteran, summed it up, “Always less expensive. Good food. There should be a push for public PX style grocers across the country.”

Suppliers get big, frequent purchase orders and don’t have to deal with the inside income shenanigans of for-profit grocers. A broader public sector could provide a competitive wedge against business models in corporate grocery chains that pad their margins, are loathed by suppliers and do not deliver better prices or quality to customers. It would mean dignified, living wage, unionized jobs that create household wealth and stabilize communities. And just like the military commissary system is recognized as a unique channel of trade (like mass, drug, convenience or natural/specialty), public grocers could carve out their own market niche, as a large scale, ethical buyer that suppliers will want to sell their products into, without the chargebacks, invoice deductions and slotting fees common to for-profit retail and wholesale.

Faye Guenther, President of UFCW 3000, agrees, “Over the last four decades the supermarket industry has become highly concentrated and the power of workers and consumers has been dramatically reduced. We need a public option in the supermarket industry—stores that are focused on providing healthy food in our communities, while providing jobs with good wages and benefits. The public sector already has large, efficient food supply chains through municipal education departments and through the U.S. military commissary system, so we don’t need to reinvent the wheel. Publicly owned supermarkets should find the right way to piggy back on those systems.”

Public groceries could also be crucial to enforcement of RPA. In the short term, antitrust rulings could be disruptive to grocery markets, if violators were forced to shut down, sell off divisions to local or regional competitors, or otherwise revamp business models to be in compliance. RPA enforcement would need a backstop if there were sudden market disruptions that threatened community food supplies where dominant firms control large portions of the marketplace, such as Walmart does in much of Oklahoma or Arkansas.

And what such public grocers sell is up for discussion, but over a dozen cities already have well-established values based purchasing programs, at scale, for public institutions that prioritize fair wages, human rights, animal welfare, environmental sustainability and community benefits. Values based purchasing is based on road tested private sector supply chain practices found in thousands of for-profit grocery stores, from Whole Foods to Kroger to Thrive Market, but improved upon and folded into public institutions that offer ethical, high quality products free or low cost at point of consumption.

Public grocers could also leverage existing advantages of scale, such as in New York City where public institutions already purchase over $500 million in food a year. Public grocers do not need to be utilities or monopolies. Instead, building and offering a public option for grocery could be the backstop that the food system needs, that provides great food for communities, that suppliers and farmers love as an alternative customer to extractive retailers and wholesalers, and that is a great place to work. New York Public Grocery-NYPG.

There is ample history and validation for public groceries from all over. Azalea Fresh Market is the Atlanta’s first government-run grocery store, offering fresh and locally made foods rather than packaged or convenience items. It is the result of a collaborative effort between the City of Atlanta, Invest Atlanta, Savi Provisions, the Independent Grocers Alliance and community members. Madison, Wisconsin and rural Venice, Illinois, also plan to open municipally-owned stores and Boston, Portland, and other cities are exploring.

As Nevin Cohen and Raj Patel have documented, such public efforts can be viable and effective. Depression-era New York City Mayor Fiorello LaGuardia built a network of city-run indoor markets and six of these LaGuardia markets still operate today. The Food Retail Expansion to Support Health (FRESH) program subsidizes new and enlarged supermarkets in underserved neighborhoods. FRESH supermarkets must reserve 30% of their space for perishable foods, with at least 500 square feet for produce. New York City has one of the largest farmers’ market networks in the U.S., with more than 120 markets across the city during the growing season. The City provides land and operational support and enables markets to accept federal SNAP benefits, funds more than 700 food pantries and soup kitchens citywide and helps low-income New Yorkers with chronic diseases purchase healthy groceries online.

India’s Public Distribution System (PDS) distributes subsidized food and non-food items to India's poor. Istanbul’s small scale, municipal neighborhood markets sell food at or below cost. The non-profit stores are only available to households whose low-income status had been verified by the city. Prices are low, and families receive pre-loaded monthly loyalty cards. Bulgaria’s government has announced plans to create a network of 1,500 stores across the country, with the goal of providing affordable groceries at a low markup, and supporting small-scale rural food production. In South Korea, public investment in “precautionary” supply chains ensures that public institutions have access to healthy, safe and sustainably grown products.Mexico has 25,000 basic goods outlets, with plans for 30,000 tiendas bienestar, well-being stores, by 2030. In Mexico City, programs like Leche Liconsa provide subsidized milk and other food staples to low-income households. 

Brazil has pulled out all the stops to address poverty and hunger, and built a model that looks applicable to the U.S: expansion of cash transfers to the most vulnerable families; a universal school feeding program, expanded to other public institutions; an increase in minimum wage; public procurement from family farmers; targeted support for Black and Indigenous communities to have access to public food purchases; granting every Brazilian the human right to adequate food in national law; a robust Feeding Cities program; and unprecedented cross-government coordination.

But public sector retail is just the start. A more ambitious vision could also include public sector investment further back in the supply chain, in food hubs, distribution and wholesaling, in processing and manufacturing, in storage and logistics, and in farming and food production. Such a model could operationalize the right to food, steer supply chains in the service of sustainability, good jobs, and the common good, and take the race to the bottom profit motive out of large scale food provisioning.

Alternative business models that would benefit from antitrust enforcement also deserve further public investments and subsidies, such as worker cooperatives or consumer owned cooperatives. They are better tuned into local farmers, products and consumer needs, disrupt market concentration, and empower workers and community members to be active participants in the food system. But they still require full margins to operate, and tend to be higher priced because, unlike discounters and mass merchants, many try to pay fair wages. And the public market stalls in New York City are only partially subsidizing their gross margin through lower rents and taxes. These public markets still must take a markup over wholesale to pay for labor and other overhead, and they don’t necessarily have the lowest possible wholesale costs, and don’t solve for affordability.

11-Inevitable.

Since 2019, grocery prices have risen higher than the gross margins needed to sustain most retail operations. And no matter the best intentions of local, independent and cooperative grocers to serve their communities, it is mostly outside of their ability to make food affordable again, simply because the increase in price since 2019 is equal to or greater than their gross margin they need to operate. This is even more extreme for low margin discounters and mass merchants. They can’t cover the spread.

The only solutions to the affordability crisis are to expand federal food subsidies for consumers and fully subsidize the rise in prices, and to create and expand a large scale public enterprise model that assures low wholesale costs and takes the gross margin out of the consumer price equation.

That is how we are going to make good food affordable again. Inflation has made public groceries inevitable.

Why Regenerative Farming Needs Organic Certification-And Vice Versa

Consumers are rebelling against a food system where causing harm is a basic function of doing business. They are demanding healthier food that heals the planet, that is beneficial to workers and kinder to animals. Progressive sectors of the food industry have responded in kind, with a spate of new supply chain and production rubrics under the heading of “regenerative”.

One of the leading lights in this movement is Regenerative Organic Certification (ROC), a three-tiered framework encouraging continuous improvement upon a Certified Organic baseline. Launched in 2017, ROC founders understood that organic was among the most popular and trusted food production standards. ROC now has over 5.7 million acres under cultivation with 50,000+ farms, 370 crops, 118 brands and over 800 products. ROC-certified brands such as Simpli, GoodSam and Lundberg Family Farms continue to rack up industry awards and kudos, while allied organizations such as Mad Agriculture have committed over $50 million in funding to scale up such practices.

We recently spoke with Elizabeth Whitlow, Executive Director of the Regenerative Organic Alliance about what is driving these trends.

Errol Schweizer: Tell us a bit about Regenerative Organic Certification (ROC). 

Elizabeth Whitlow: The Regenerative Organic Alliance (ROA) came together in 2017 and was spearheaded by Patagonia, Dr. Bronner's and The Rodale Institute. And these are all organizations that had worked in organic for a long time. Organic is part of their DNA. And organizations that really question the assumptions of business as usual. And they wanted to continue to support organic, but they saw a lot of opportunities to really advance an agricultural system that was more encompassing, more holistic. The whole idea is that shoppers could be assured at a glance that whatever they're purchasing, it's going to make a positive impact at every level: environmental, ethical and social. And so the ROC farms and products are meeting the highest standards across these three pillars. That's soil health, animal welfare and social fairness of the labor. The ROA is a nonprofit and oversees the standard. We work with third party, accredited certifiers. We require organic as our baseline, and we build from there. 

S: The “R” word: regenerative. It seems to be overused lately. Why is that? 

EW: Regenerative has become quite a buzz word. It's a really hot marketing term and anything that is a hot marketing term is going to be subject to greenwashing. You see some really big corporations jumping on board and wanting to claim regenerative and become regenerative. To regenerate is to give life, to bring life back. Regenerating the soil, regenerating a community. Not detracting, not degenerating, and moving away from a system of agriculture that we have had for 75 years that is incredibly exploitive, extractive. It is high input, high output, it's taking away everything. It is taking away the health of the people, the health of the rivers, the health of the soil, the health of air. It's only lining the pockets of the big corporations and the really big farms that are pushing this kind of industrial monoculture system. So we want to look at agriculture through that lens of how indigenous people did for thousands of years before we entered into this chemically based agriculture in the last 75-100 years. At the end of the day, the major driving force for everybody's extreme interest in regenerative is climate change. 

ES: What does ROC talk about when it says “soil health”? 

EW: We are very much aligned with other regenerative efforts. You are going to keep the soil covered, like basically an armor over the soil, keep living roots in the ground whenever possible, minimize your disturbance of the soil, moving away from really heavy tillage and heavy equipment, bringing in biodiversity whenever possible or increasing diversity through cover cropping. And crop rotation requirements that go above and beyond the federal law for organic, where we have bronze, silver and gold levels, a program that builds continuous improvement. We also really try to encourage doing rotational grazing with animals and bringing animals back onto the farm. So those are some core principles that I think are in solid agreement across the board. 

ES: Why don't you tell us a bit about the animal welfare standards? 

EW: We recognize 14 different global certification programs, really high bar animal welfare programs. We've learned a lot from many in that industry. We look at the Animal Welfare Approved Certified Humane Pasture Systems. The Global Animal Partnerships Step 4 and 5. We also uplift the 5 basic principles of animal welfare. Freedom from discomfort, fear, hunger, pain. I'd say the most important one is the freedom to express natural behavior for that species. If it's poultry, they like to forage and pack. They need trees to take cover from. They don't want to be out in open fields with predators flying overhead. So things like really understanding the species and what their natural tendencies are. Also looking at suitable shelter and limited transport times. That's really challenging because we've got a highly consolidated meat industry and not a really strong infrastructure for processing animals. 

ES: ROC also has a human labor/social responsibility component. What does it encompass and what are some of the opportunities with it as well? 

EW: That social fairness pillar is one of the most challenging aspects of this program. There's a lot of different certifications available that verify fair labor practices. Fair Trade International, Fair Trade USA, Fair For Life, Small Producer Symbol, Naturland Fair, Agricultural Justice Project and the Equitable Food Initiative (EFI). We had some real struggles in applying the social fairness pillar in the global north, in the US in particular, because some of the programs weren't as widespread or weren't as applicable. For example, EFI is the third leg of their stool which is looking at food safety, environmental practices and labor practices. And it's for really big buyers. So it's not applicable to a more diversified farm that is not really selling to Costco or TargetTGT. 

When we talk about vulnerable workers we get about 10% of the engagement on our social channels (as talking about soil health). We really need to do a better job helping everybody understand the plight of the workers. They're sometimes in a working environment classified as slavery and other really egregious examples of labor exploitation. And so these are really dire issues. We're working on a guideline for farmers and farm workers so that we can help the farm workers understand what their rights are. If you talk to any of the Global North farms who have been through our certification program, what they see is how an empowered workforce actually is more productive, morale is better, they get along better, broken equipment gets repaired sooner. 

Our social standards are quite strong. One criteria is around getting to a living wage. It's a tall order for farmers to be paying a living wage, but everybody should be earning a living wage. 

At the end of the day, we are a certification. We are a logo that is put on pack for consumers to buy something. We are not able to have such contractual relationships like the Fair Food Program. I think they're very best in class. And what they're doing is incredible. But that's not our mechanism. 

I still think there's a long way to go for improvement, but we're on a good track and the main thing is that we don't want to have all this focus on soil health without considering the health of the people who work the soil. 

ES: What is next for ROC?

EW: We're going to be really hitting hard in the marketing and helping retailers explain to consumers why it's important to have third party, credible, meaningful third party certification, why organic matters. Organic has its limitations, but it's still the best thing we've got. 

We need to move policymakers to understand all the beautiful benefits that organic is bringing. Look at the Organic Hotspots Study from OTA to look at what happens in every community where there's more organic farming, more organic businesses, healthier people, better economic returns, more resilience. 

I'm not going to waste my time talking with the people who don't believe it or think it's too hard. No, it's not too hard. And chemicals are bad for us. Chemicals kill us. Go watch Common Ground. See what happens with all the chemicals that are being applied in that film. We don't need to keep applying chemicals. We can do organic. And I believe that it's just a matter of we keep talking about what we can do instead of what we can't do.

Why Independent Grocers Are Pushing For Better Antitrust Enforcement

The $1 trillion grocery industry has been at the epicenter of debates around supply chain shocks, processed foods, price inflation and profiteering. But after decades of lax enforcement, antitrust authorities have started taking a closer look at the industry, which is heavily consolidated at the national and regional levels. The FTC filed a lawsuit to block the controversial $26 Billion Kroger-AlbertsonsACI merger. Shortly after, the FTC released a long anticipated report detailing how the biggest grocery chains leveraged the Covid-19 pandemic to stay dominant at the expense of both smaller competitors and consumers. 

Despite these pressures, independently owned grocers have maintained a solid market share position in many communities. They have also greeted the renewed antitrust oversight with enthusiasm. 

Chris Jones is Chief Government and Industry Relations Officer and Counsel at the National Grocers Association.

Errol Schweizer: Who is National Grocers Association (NGA)?

Chris Jones: NGA represents independent supermarkets and the wholesalers that service them. So all of our members are privately owned grocers. Anything from a small mom and pop IGA to a regional chain. So we are the advocacy group in Washington that is advocating on behalf of the independent grocers and trying to steer federal policies in our favor. 

ES: What is the market share market trajectory of independent grocers these days? 

CJ: We're a pretty big chunk of the market, around a third, or 21,500 storefronts. And we've seen our numbers increase over the last ten years or so. So I think what we're up against in the current food economy is really challenging right now ever since Covid-19, as we've dealt with the problems of food price inflation, shortages, disruptions and it's been tough for the independents to navigate through those many challenges. 

ES: I wanted to get your perspective on the FTC lawsuit around the KrogerKR-Albertsons merger and where NGA weighs in on that? 

CJ: We've been nervous about this transaction from the very beginning. Our primary concern is that the consolidation has created such powerful buyers that control so much shelf space in the country that it gives them massive economic power over food product suppliers, anything from a CPG manufacturer to a producer. And with that power, we have seen the largest players use it to undercut the independent buyers by getting superior terms, whether that's better pricing, whether it's exclusive product offerings, package sizes, promotional allowances, what have you. The largest players are really able to use that muscle, what we call buyer power, to get better terms, but then use it to undercut the smaller players, which makes it really hard for the independents to compete, particularly in the center store. The Kroger-Albertsons merger made us nervous because you have the two biggest conventional supermarket chains that are merging to the point that they almost represent the same size of a grocer as a WalmartWMT. So I think the way we see it is that if you've got two massive buyers, that just harms everyone else's ability to play fair and compete on the merits. So our initial take on that is that if there is not some sort of constraint on the ability of Kroger and Albertsons combined to use their market power, then it's going to be a transaction that hurts everyone who's trying to compete with them. And it would hurt consumers as well. 

ES: The FTC just released a pretty compelling report about how large scale grocery chains leveraged the Covid-19 pandemic to boost profit margins. I wanted to get your take on that report.

CJ: The report was started during the challenges we were experiencing during Covid-19 in 2021. And the idea was to look at the disruptions we were seeing in the marketplace, the higher prices, the shortages, and to see if there were any anti-competitive behaviors at the heart of it that were causing pain to consumers. And lo and behold, about two and a half years later, they released the report last week and found, unequivocally, that the largest players were taking advantage of Covid-19 to secure better terms from suppliers. They made the point that having product in stock was a point of competitive differentiation. And they knew they had this power to get first access to product in short supply. And so they ratcheted up “on time and in full” requirements from vendors. And that made it harder for the independent grocers to serve their customers. What you have since Covid-19 is that the largest players in our market were able to not only cut their way to the front of supply lines, but also as inflation went up, they were able to get products at lower prices relative to the competition. And then they're able to take more margin because of it, which raises the prices for everybody, for all consumers. 

One thing to note, though, is there's still a lot more for the FTC to do. They cited census data, but the subpoenas that they sent out to the nine players in the marketplace did not include pricing information. So they were making connections between this bullying buyer power behavior and then the margins. So I think they left the door open for further investigation, both by the FTC and for Congress. And that's, of course, what we think the agencies and the U.S. Congress ought to be focused on right now. 

ES: How do the FTC and the Department of Justice Antitrust Division coordinate or differentiate their efforts around making sure there are competitive grocery markets? 

CJ: In grocery there's a big gap because you have the FTC, which focuses on supermarkets and retail more broadly and then you have the DOJ that focuses on the food and agriculture economy. And of course, these problems are interwoven. I think that is one thing that has really slowed the gears and prevented the agencies from being as effective as they could be, because you have this stratified enforcement posture. But after a few years of enforcement being ramped up, they're starting to catch their stride a little bit and plug in those gaps. 

ES: What do you think of the rebuke of the FTC lawsuit against the Kroger-Albertsons merger, that the agency defines the grocery market too narrowly?

CJ: I think it's interesting. I think that's just kind of how antitrust law is practiced in the merger enforcement context. The enforcement body bring the suit and wants the market as narrow as possible. And of course, the company that the suit is filed against would like to see a broader market. I think the thing about market definition is very different depending on where you live. So grocery is a very local market. In some places you may have a consumer base that shops across channel. And people who go to dollar stores, who go to Walmart and go to their local grocery store, they may order on AmazonAMZN. Or you may have consumers who are only purchasing through 1 or 2 channels. I think what the argument that Kroger is trying to make is that the consumer behavior has changed so much that broadly, consumers cut across multiple channels to buy their products. But I think, at the end of the day, consumers need grocery stores. Everyone wants to shop at a place that's got a produce section, meats, a deli, a bakery. And I would call the FTC's argument stronger here because pretty much every American consumer needs that local grocery store. 

I think where this gets blurred for us is that, in many cases, you've got the local IGA store with a Dollar GeneralDG across the shopping center. And Dollar General is able to get these smaller package sizes of goods from the manufacturers and by going to the antitrust enforcer and saying, “Hey, we don't compete with the grocery store. So that gives us the ability to get different terms and different products.” But of course we know that they're competing to some degree for those consumer dollars. So I think when you look at upstream buyer power, there is a really broad definition. But when it comes to merger enforcement, it really is a local market by market basis that we try to really look at the health of competition.

ES: What policy enforcement or legal remedies would NGA like to see in order to protect independents and make the grocery sector more diverse and compelling and not so damn consolidated?

CJ: There's a law on the books called the Robinson Patman Act that dates back to the Depression era. It prohibits price discrimination. If you're a wholesaler and you're able to purchase a product, a widget in the same quantity as a competitor, then you should be able to get the same price for that. But that law has fallen out of favor by the antitrust enforcement agencies and the courts for the last 40 years, to the point that there's hardly any enforcement of it. 

The lack of enforcement of Robinson Patman has created an incentive in the marketplace to consolidate, because the more you consolidate, the more power you have. And when you don't have any constraints, when you don't have any price discrimination laws, then you can get away with whatever your trading partners will take. With the Robinson Patman Act, if we're able to purchase in the same quantities, in the same efficiency, then everyone should be entitled to the same price for goods. So I think we start there and then we try to build on that. I think in that example of the dollar store competing across the shopping center with the grocery store, you shouldn't have different package sizes for different channels if the two players are competing with one another. So we need to get rid of these distinctions and channels of trade that limit competition in the grocery sector. So I think those are the two things that we hope that Robinson Patman can tackle if the federal enforcers are able to file a lawsuit in court. But beyond that, Robinson Patman was passed in the 1930s, it's a very old statute. We also need to see some modernization of that, so that it tackles the various ways in which we experience and see discrimination in the grocery marketplace today. 

ES: That makes sense. Any closing thoughts along these lines? 

CJ: We're just happy to see this issue of grocery competition, of the health of the consumer, back in the forefront. Hopefully we can keep the momentum going.

Why Austin Frerick Is Taking On The Grocery Barons

Austin Frerick is the author of Barons: Money, Power and the Corruption of America’s Food Industry. He is a 7th generation Iowan and is a Fellow at the Thurman Arnold Project at Yale University. In 2022, he worked with the U.S. Department of Agriculture to organize a conference at Yale Law School entitled “Reforming America’s Food Retail Markets,” which explored competition issues in the nation’s grocery industry. 

Errol Schweizer: Why don't you tell us about your motivation and inspiration for this book? 

Austin Frerick: I grew up in Iowa, went to Grinnell, went to Wisconsin, and now this antitrust center at Yale. And I've spent the last two years studying this intersection of food and monopolies. 

So this whole book started with two frustrations I had for a while. One, so much of the food and agriculture news we read is just geared towards the 1%. Here's a new $300 restaurant. Here's a new buzzword of the moment. And I just didn't feel like a lot of stuff was really grappling with what you see every day at the grocery store. But then also, part of it is, what the heck happened to Iowa? 

My book is about seven different robber barons in the food system. But in my head, each baron is really telling a different concept, a different structure. So for example, I have a grain baron, Cargill. Cargill is really the story of the Farm Bill and what happened to it. Cargill is the largest private company in America. They're all about from the second grain is picked, to when it's put on your plate. They want to own that process and they don't have consumer facing brands. A lot of people don't know who they are. They're almost like the 19th century British Empire because they're so global. We've never had companies like this before. 

ES: The one that I found the most interesting was Driscoll's. 

AF: This was a wild one to put together. They sell berries, but they don't grow a single berry. 

ES: They're like the AirBnB of fresh fruit. 

AF: When I really started researching and reporting the story, I mostly focused on water. I was just noticing how water intensive berries are, all that kind of stuff. But that's when the labor stuff really started creeping in. A lot of berry production has shifted offshore. Driscoll's has contract shrubberies on every continent now except Antarctica. You know, Morocco, Argentina, Chile, Baja California. But then you start realizing when you start researching these spaces, these are just modern day plantations. It's really, really hard to report on this stuff. We see stories about what goes on in these plantations, how children are picking berries, the labor conditions, what have you. You're only just seeing a fraction of it because it's so hard to get there. Journalists are putting their personal safety at risk. 

Their brilliance comes from realizing the creation of WalmartWMT. Walmart wants one company to do berries year round. So it's like they had first mover advantage. They saw the trend lines and they made a really smart business play into it. Taking a production model borrowed from the South. This model of production shouldn't be allowed. 

ES: It also shows that consolidation begets consolidation. It's a self-fulfilling, self-replicating system.

Tell us how you landed on Walmart, because it's a really compelling and frightening read for anybody in the grocery industry. 

AF: It's a frightening read. Walmart is a grocery store. Period. Fundamentally, the numbers are insane, 60% of their sales are grocery. Their market share is the same as the second, third, fourth, fifth, sixth and seventh combined nationwide. Stacy Mitchell did an excellent report on how they just carved up the middle of America. They have like a 70 or 80% market share in some truly big cities like Wichita. 

It's not just grocery. Walmart's move into health care is truly scary and incredible because all the red states that didn't expand Medicaid, they're adding health care clinics so people can come in for cash, get health care services. Then they have the pharmaceuticals. They’re basically banks. They're testing out veterinary clinics. Their whole goal is to capture every dollar of America's underclass. 

ES: It's really neoliberalism in a nutshell, moving away from public provided services and everything is privatized. But here it's done in this low cost model, that, like you say, caters directly to the working poor. 

AF: There's a ruthlessness. What (Sam Walton) built is truly phenomenal. He didn't come up with the Walmart Supercenter, it is not his invention. He just stole an idea from the French. Sam's Club, they just stole from Costco. So it's like this weird appreciation for what he built. But then you quickly realize they also just benefited from deregulation. And you had this whole framework of market protections under the Robinson Patman Act. They were just competition protections because the second someone gets more powerful, that bargaining position in retail, that power compounds itself. And you had all these safeguards in place to stop that. And now once you're the biggest, you set the table. You always have the best price breaks. Which just reinforces your power.

And we have the richest family, not in America, but in the world, just having this amount of power we've never seen before. And people don't realize what the (Walton) family is today. They own Walmart, they own more than 50% of the company. And that is an insane amount of power. 

ES: What are a couple of the takeaways that you're hoping come out of people reading this book? 

AF: People don't realize what this means is one, the collapse in taste. The system makes bad tasting food. I mean, I notice it in bacon. You're eating the muscle of another animal. A pig that runs around tastes way better than a pig that stands in a shed all day and eats corn. You take a Driscoll’s berry, that doesn't have any flavor, that's engineered for transportation, versus a strawberry in your backyard. It's way better. 

I view places like Iowa as extraction colonies. They remind me of West Virginia in the 19th century and the coal companies, or the way the British Empire would run colonies in Africa.

But what this really means is we're not doing anything about climate change in the food system. I mean, all of our solutions for addressing climate change in the food system are a joke. 

This book is intellectually two things. First this is what neoliberalism did to the food system. But also, where do we go from here? I mean, it's easy to complain, but what should a post-neo-liberal food system look like? And that to me is where the hope is. What does a multicultural democratic system look like?

The focus needs to be on labor. So many more people work in the food system when you include people like my parents. I'm also of the opinion that we need to abolish the Farm Bill. I think the system is to just too corrupted. It's designed for Wall Street. It picks winners and losers. It's incredibly expensive. So I’d rather take all the money in the Farm Bill, and I'm not talking about the food assistance programs, but just actual farm programs and just put it into conservation. Go from there. And then, to me, a silver lining, especially for rural America, is putting animals back on the land. 

One of the beautiful things of writing a book like this is I just spent a lot of time with different people doing it right. And what you quickly realize is throughout the food system, there's a lot of people trying to do the right thing, trying to implement reforms to get us to a better, healthier, more sustainable, inclusive, multicultural food system. We just have a few greedy people holding us back.

How Food Industry Workers Want To Modernize The Farm Bill

Every five years, the Farm Bill comes up for renewal. Originally devised during the New Deal, the Farm Bill was intended to keep food plentiful and priced fairly, to keep farmers on the land and to keep the land healthy. Over the decades, much of the Farm Bill has evolved into a crutch for chemical-dependent monocultures like GMO corn and soy, while excluding the most vital members of the food system, including food chain and farm workers and small, diversified growers.

HEAL Food Alliance is a member-led organization that intends to bring the Farm Bill into the 21st century. We spoke to Navina Khanna, Executive Director and a co-founder of HEAL about their vision to transform and modernize the Farm Bill.

Errol Schweizer: Could you give us a quick background on what your organization does? 

Navina Khanna: HEAL stands for health, environment, agriculture and labor. We're an alliance of 43 organizations around the country that are working on different aspects of our food system. We work together to build our collective power and to transform our food and farm systems, organizing together through campaigns and really investing in the relationships, in the work and the movement building that it takes for us to shift narratives, shift policy, shift culture for the kind of food system that we all want and need. 

ES: What is the Farm Bill and why should everyone be interested in it?

NK: The key thing to know is that the Farm Bill is the biggest piece of legislation that shapes food policy in this country. It's typically renewed every five years or so. It's a several hundred billion dollar piece of legislation, and it covers everything from what gets grown and how much farmers get in order to grow it, to what kinds of environmental protections are included, to authorizing things like food stamps or EBT/SNAP. 

And the Farm Bill has been around for almost 100 years. But for the most part, the Farm Bill really props up corporate control of our food system and the systems of industrial agriculture that include overuse of inputs like synthetic pesticides and fertilizers. There's also some things that the Farm Bill has always excluded. And those are some of the things that we're fighting for. The Farm Bill, for example, has never included labor as part of it, even though there's 21.5 million people who work in our food system, who hold 5 of the 8 worst paying jobs, and is our biggest economic sector in this country. We believe that it's essential that those workers be included in such an omnibus piece of legislation that guides our food and farm system. 

We have five main priorities that we're focused on. One is about labor and ensuring that workers are included in the farm bill. The second is about support for BIPOC producers and making sure that they have what they need in order to thrive. We're of course focused on making sure that communities have access to enough nourishing food through SNAP/food stamps. We focus fourth on community control over corporate control. So taking away some of the supports for the ever shrinking number of corporations that control our food system. And finally, focusing on ecosystems and the environment and ensuring that this Farm Bill is actually a climate bill. We know that any major piece of legislation at this point cannot also be considering climate. And when we know that our food and farm systems have such big impacts on climate change and so much potential to solve for climate change, there's no reason for that not to be so much of the foundation of how this bill is written. 

ES: Can we talk a little bit about how farm and food system labor has never really been addressed in the farm bill? The food system doesn't exist without the people working in it every day. What are some of the things that you are asking for around labor policy or programs? 

NK: So we recognize that there are some things that are out of USDA jurisdiction. But there are so many aspects of what happens with food and farm labor that are under USDA jurisdiction or could be, if we were thinking more comprehensively around what it meant to expand and equalize labor laws.

There are some specific things, like, for example, USDA determines whether or not meat processing plants can increase the line speeds. So what that means is the speed at which the line is going, where folks are making cuts to poultry or to hogs or whatever. It's repetitive motion that folks are doing many, many times per minute. And the handful of corporations that govern our meat industry are always pushing to increase that line speed, which causes repetitive stress injuries for workers. It forces workers to not be able to take things like bathroom breaks. Meat packing is considered one of the most dangerous jobs in the country. There's a report that just came out a couple of years ago that really identified the dangers there. And there's a bill that was introduced, during peak pandemic when we were seeing so many of the issues with the meatpacking plants, called the Protecting America's Meat Workers Act. And so we're using that as a marker bill that can get used to help shape the Farm Bill and basically regulate not only the speed at which the lines are going in the meat processing industry, but also ensuring that there's enough oversight over that and there's adequate staffing for it. 

And that's all within USDA jurisdiction to do that and could be written into the Farm Bill, things like climate protections for farmworkers who are experiencing extreme heat stress, in many places are forced to work under wildfire smoke conditions or are in no way compensated after there's a storm that destroys their livelihood. Right now, farm owners have access to insurance and other things that protect them when there are climate catastrophes. But workers don't have access to those same resources. Other things that we are looking for this next Farm Bill to include are a multilingual alert system that lets workers know when the conditions are unsafe to work and that there is support for them when conditions are too extreme or dangerous and people need to evacuate in the case of a wildfire or whatever else. So those are within the purview of USDA and we think could very much be a part of this upcoming Farm Bill if those that govern are willing to take action that's necessary. 

ES: Why do we even need a Farm Bill? 

NK: The Farm Bill has potential to actually resource BIPOC producers and resource growers who are trying to do the right thing, whether that's in terms of how they support their workers or how they treat the environment. There's a lot of potential for hundreds of billions of dollars of federal resources through this bill to go towards things that are aligned with our values. So historically, the Farm Bill has included nutrition programs like SNAP and it's included the Farm Support Program. And during the last Farm Bill cycle in 2018, conservatives actually tried to split those apart and say, “let's only support the farm things through the Farm Bill. The Farm Bill shouldn't deal with nutrition programs, it shouldn't deal with supporting communities”. And the danger there is, if we just think geographically and we think about where the most conservative states are, who holds power in our agricultural committees and so on, those are the states that have big agriculture at the helm. And so if we split the bill, then we are most likely to have a Farm Bill that continues to support big agriculture, that continues to support just a small handful of folks, and that doesn't account for the needs of so many of our communities, whether that's through the food programs like SNAP/EBT, or whether that's through the kind of support that's needed for a much more diverse farming culture that includes Black, Indigenous, people of color producers. That includes the kinds of conservation measures that folks have been using. That includes traditional ecological knowledge. The Farm Bill isn't the be-all, end-all and these are the priorities that we're going to keep fighting for and we're going to keep creating solutions around, no matter what the political arena is. The Farm Bill is just one avenue for that.

Why Now Is The Time To Reinvent Processed Foods

Processed foods are once again a hot topic. Between catastrophic externalized costs, new diet drugs, rampant price gouging and a growing wave of regulations, processed foods are attracting all the wrong attention. But processing may also be key to reinvigorating the best and brightest trends in the food industry.

People have processed food since the dawn of time. Nixtamalizing corn, stomping grapes into wine, smoking fish. Processing food makes us human. But in recent decades, as food processing has become more industrialized and consolidated among ever fewer manufacturers and retailers, things have gotten out of control. 

Much of our food processing infrastructure was originally underwritten by federal contracts for provisions needed to feed the troops during WW2. The grocery industry is to this day a permanent wartime economy. The agribusiness sector solidified during the post-war period to ensure cheap, calorie-dense, convenient and abundant food for all. Decades later, this stunning success has led to widespread consumption of ultra-processed food (UPF’s). It has also wrought enormous damage to human health and the environment.

In order to understand these impacts, scientists developed the NOVA classification system. NOVA classifies foods at 4 different levels of processing, from unprocessed all the way up to UPF. The system is not perfect, but it has helped scientists understand and articulate how processed foods have warped health and wellness indicators across the world.

In industrialized countries, over 50% of calories come from ultra-processed foods. Study after study links overconsumption of UPF’s like breakfast cereals, soft drinks, hot dogs, French fries, frozen pizza and snack chips to non-communicable diseases, including type 2 diabetes, heart disease, colorectal and breast cancer, obesity, depression and all-cause mortality. UPF’s are often high in salt, sugar and fat and are quite likely addictive. They are priced cheaper per serving than minimally processed and whole foods. They make up at least $485 billion of the $1 trillion U.S. grocery industry, or close to 50 cents of every dollar spent at checkout. About 70% of products across dozens of categories made by CPG giants, including Kellogg, General MillsGIS, Unilever, Kraft Heinz and Nestle, are considered unhealthy. UPF’s dominate shelf space, mindshare and wallet share. How? Over $25 billion in annual promotional trade spend for BOGOs, end caps, and shelf specials, plus over $14 billion a year spent on advertising, including $2 billion a year directed at kids. Even cravings can be manufactured.

The retail prices of UPF’s do not include their externalized costs to health and the environment. Cost externalities are up to $11 trillion a year globally, with over $9 trillion, or 73%, related to health costs. In the U.S., these externalities are around $1 trillion annually, roughly equal to the value of the entire grocery industry. Over 40% of U.S. adults are obese and 70% are overweight. Type 2 diabetes affects over 35 million Americans. The cost of diabetes is over $413 billion, or 25% of all health care spending. This is also equal to 40% of all money spent on groceries in the U.S. Environmental and biodiversity externalities are close to $1 trillion, worker exploitation over $100 billion and farm subsidies well over $20 billion. UPF’s are not as cheap as they seem.

But late capitalism invents new problems to manage old ones. GLP-1 agonists, including Ozempic, Wegovy and Mounjaro, enable people to resist cravings and reduce the amount they eat, kind of like anti-Viagras for food. Up to 7% of U.S. consumers, or 25 million people, could take these drugs. Drug maker Novo Nordisk is now among the most valuable companies in Europe. Wall Street analysts are fretting that demand for UPF’s may get curbed by increased use, despite unsavory side effects. Meanwhile, the CPG industry has been riding high on price over volume strategies, passing costs onto consumers and raking in record profits while selling less actual products.

The processed food industry seems to be taking the growth of GLP-1 agonists in stride. Leading retailer WalmartWMT, which controls over 30% of U.S. grocery sales, said its shoppers on Ozempic bought less food. Pepsico said the impact on business so far had been “neglible” and Mondelez called it “overblown”. Conagra said it will just adjust portion sizes if that is what consumer behavior demands. Consolidation and market dominance ensure these big CPG’s will be just fine in the long run. They may switch up their portfolios with more nutrient dense, organic, non-GMO, lower fat, lower sugar, higher fiber, lower carb or satiety-inducing options. Or they will go on a shopping spree for acquisitions plucked from the throngs of cash-starved, high growth, “better for you (BFY)” emerging brands. 

These “BFY” segments of processed food categories have been growth engines for retailers. According to data provided by NIQ to Forbes, “BFY” products have outperformed the rest of the market by almost 10 percentage points in the last 3 years. They are close to $80 billion in annual sales, or nearly 8% of the total grocery industry. Their price gaps to incumbent products are rapidly shrinking. Trade shows like Natural Products Expo are dedicated to creating a more sustainable and less terrible processed food sector. Emerging CPG brands like Siete Foods, Simple Mills, Saffron Road, Once Upon A Farm and Partake Foods have “de-junkified” familiar products. Store brands like 365, Simple Truth and Open Nature have made less processed packaged foods more accessible. Popular consumer trends such as paleo, Whole30 and keto emphasize minimally processed foods. Study after study shows that consumers, especially the younger folks grabbing ever greater market share, strongly prefer “better for you” products.

But this slow evolution of the processed food sector is not inevitable. Most categories are heavily monopolized by brands owned by the same handful of CPG companies. Legalized bribery schemes such as slotting fees as well as the unrestricted use of trade and advertising budgets enable incumbent brands to claim prime retail shelf space, monopolize consumer attention and dominate wallet share. Why would grocers with historically slim profit margins turn away free money? Most new and emerging brands barely stand a chance. Around 50-60% of new items get discontinued by national grocery chains every year. The growth may be in “BFY” but that is not yet the center of gravity.  

In the meantime, some governments are taking action. A number of U.S. states, including California and Illinois, are starting to regulate certain ingredients. Mexico is labeling unhealthy foods to prevent the epidemic health issues that it sees happening to its northern neighbor. Colombia is labeling and taxing UPFs for similar reasons while also curbing the growth and influence of the CPG sector.

Policy makers may be onto something, but restrictions are just one step. People also need and want better options. There is a huge market gap for food processing geared towards nutrient dense, whole food, minimally processed products. While there is plenty of processing capacity, much of it is captured by grocers or CPGs with the largest market shares. And globalization has incentivized grocers to contract for processed foods packed in Europe, China or South America. 

This middle ground for processing is key to food system change, especially with a chaotically changing climate. The “farm to table” sector is great for providing healthy and nutrient dense food, but limited in what it can solve. Farmers markets and direct farm sales represent less than .3% of grocery industry sales volumes. Farmers markets are wonderful, but relative to the food industry, they are more or less a rounding error. Maybe that is because peoples’ lives are hectic. Commuting 3 hours a day, working 8, 9, 10 hour shifts, taking the kids to school and activities. Cheapness, convenience and ubiquity are often necessities. And the foodie idea of wholesome, home cooked meals is based on a pastoral mythology disguising the role that Black servants and slaves played in U.S. food culture. Such domestic duties now almost always fall on the shoulders of wives and mothers. Does processed food imply social progress? By plugging into, replicating and scaling up farm-direct, ethical and sustainable supply chains, we can have good food and eat it too, so to speak. 

But industry wide changes are necessary because of the scale and centralization of the food processing industry. Enforcing the Sherman, Clayton and Robinson Patman Acts can start to disaggregate some of the largest food and beverage companies in the world. What next? Maybe selling divisions back to employees a la Bob’s Red Mill. Or transitioning them into consumer cooperatives. Perhaps even nationalizing some tasty, calorie dense, low-priced categories that are heavily dependent on publicly funded SNAP/WIC subsidies, like mac ‘n cheese. SNAP as it is barely covers a couple weeks of decent groceries. The USDA-administered program should be expanded to be universal, at the very least to ensure that nutrient-dense, fresh foods are free at point of sale to those in need.

The USDA should be funded to expand investment into regionalized multi-ingredient processing. Meat processing gets disproportionate attention, but meat is less than 10% of grocery sales. Because of meat industry consolidation, much of the vaunted new meat processing infrastructure will one day just get bought up by the bigger players. But the processed food industry needs more regionalized production lines that utilize aseptic, recart, retort, I.Q.F., and extrusion technologies for ingredients other than just meat. Bringing back more local packing and food storage could shift grocers away from relying on long distance imports and create well paying, skilled jobs. A cannery in every community, maybe even a food wholesaler in every zip code. Just like the post office.

Next, marketing and retail trading practices, such as advertising to kids and leveraging slotting fees for shelf dominance, need regulatory guardrails. Retail merchants and CPG brand managers have financial performance targets to meet. Unless they are given better guidelines on how to buy and sell, they will do what they can get away with within the confines of a lax regulatory apparatus. 

And then, require a 10 year “just transition” to Good Food Purchasing Program (GFPP) standards for the grocery industry. GFPPs are becoming the de facto framework for how many public institutions buy food. Dozens of cities have adopted them and campaigners are pushing for federal agencies to also utilize the standards. GFPP gives special attention to animal welfare, organic and regenerative production, labor rights, the environment and other ethical considerations vastly preferred by consumers. They reflect a “true cost” of food that is also favored by more and more sustainability (i.e., “ESG”) focused investors. GFPP standards are heavily influenced by private sector retailers like Thrive Market, Natural Grocers and Whole Foods, so requiring broader adoption is just bringing it full circle.

And lastly, in order to operationalize the right to good food, the grocery industry needs its own Hippocratic oath. “First, do no harm” should be the operating mantra for all food and beverage professionals. It’s the least we can do.

These aren’t far flung ideas for the industry. Some forward thinking brands are already pushing for them. Matriark Foods wants to serve as a prototype for a system of food processing that can scale through “replication, not domination”. Founder Anna Hammond has built an upcycled, regionalized supply chain and product assortment that features nutrient-dense packaged soups and sauces. Anna says, “The real challenge is making the big food industry produce food that's better for people, that has more regional sourcing, but at a scale that can help create things that are more affordable.”

Eve Cohen is a longtime grocery operator and the CEO of Marcellus Foods, a startup focused on fresh processing for regionally-sourced ingredients. Cohen thinks food processing plays a central role in food system repair. “A more equitable food system is possible and the right kind of food processing infrastructure is the key to making it happen. Building the next generation of food processing has the potential to alleviate so many of the challenges caused by the industrialization of our food system.”

How Workers And Faith-Based Investors Are Uniting To Stop Child Labor

The food industry is grappling with the growing prevalence of child labor. Many Republican-led states continue to weaken child labor protections. Meanwhile, major food brands face new pressures from shareholders and advocates to build more fair and dignified supply chains. At a recent Tyson FoodsTSN shareholder meeting, workers and faith-based investors demanded the corporation perform a full audit into illegal child labor in its supply chain. While the proposal fell short of the necessary votes, advocates continue to push for change. 

We spoke with Magaly Licolli, the Founder and Executive Director of Venceremos, a worker-led community organization based in Springdale, Arkansas to get more context on these issues.

Errol Schweizer: Please give us a quick introduction of what Venceremos is doing in Arkansas.

Magaly Licolli: Venceremos was founded in 2019, before the pandemic started. When the pandemic hit the U.S., we really didn't have any other option but to organize and mobilize the community and the workers. We are based here in Springdale. This is the home of Tyson Foods. We work a lot with Tyson workers. And for the past years, we've been mobilizing the workers. Last year, workers went on a strike for a full week. And we were supporting those workers, too. 

ES: Can you give us a quick rundown of who Tyson Foods is? 

ML: Tyson is one of the biggest meat companies in the US. They are based here in Springdale. And the thing that I can tell you here, living in the same place where they are based, is that they have a lot of community control. They control a lot of the narratives in the community by providing charities, to nonprofits, to schools, to churches, and even the university, so they can really engage directly with the community to overshadow, to silence the voice of the workers. 

ES: Who are the workers at these Tyson plants? What are their lives like? 

ML: The majority of the workers here in northwest Arkansas are Latino, from Mexico, from El Salvador, from Puerto Rico. But we also have a large population of Marshallese. They come from the Marshall Islands. The U.S. used their islands to test bombs and allowed those people to come to work in the U.S. 

It's not like Arkansas is a state that welcomes immigrants or refugees. But we know that the poultry industry is one of the main industries in in Arkansas. And they need vulnerable workers. They need workers that don't know their rights, that don’t know how to speak or write English. They are afraid of speaking up. They're pretty isolated, working in these plants. So, in the last year we've seen how the state is allowing kids to work in the industry, which is very concerning for us because we know the dangers of working in these plants. The hazards, the exposure to accidents that workers face daily. And we know this is not a place for kids to work.

ES: What has it been like these last couple of years to work in these plants? 

ML: It has definitely been really hard. I've been working directly with workers for the past nine years, and I can tell you that the situation got worse since the pandemic started. We saw a lot of workers dying during the pandemic, and production increased during and after the pandemic. A lot of workers are having issues with carpal tunnel syndrome because of the repetitive motion. The line speed was allowed to increase in certain plants from 145 chickens per minute to 174 chickens per minute. Workers are working shoulder to shoulder processing and cutting the wings, the legs, the rest of the chicken. So that means that workers have to do a cut 40 times per minute. They have to use knives, saws. And sometimes the complaint is that they are not sharp enough and so they have to put more force whenever they are trying to cut. The workers in this department are pretty much seen as machines. They are they are not allowed to go to the bathroom until someone is replaced by another worker. But if there are not enough workers, there is no chance for them to go to the bathroom. They have been forced to wear diapers because of not being granted bathroom breaks. 

ES: What can you tell me about the child labor shareholder proposal and what happened with it? 

ML: This is a pretty concerning situation for workers and people here in the community because we have seen the Department of Labor expose where kids were found working inside the chicken plants. Some of them were Tyson's plants, where the kids were hired to clean the machinery. And also last year, the state of Arkansas rolled back their child labor protections. And so Tyson has been really quiet about that. They say they have zero tolerance for child labor, but they are not doing enough to protect kids in the community. And we also encountered some kids working in the chicken farms. And that is very concerning because obviously these kids are being hired by contractors that are being paid by these companies like Tyson. 

The investors are also concerned about this situation. And they proposed to do an audit, to really evaluate the extent of how many kids are working within their supply chain. Because Tyson, for the past year, they've been really denying and not taking any responsibility. They are not doing anything to set higher standards to prevent kids from working within their supply chain. 

The investors proposed to do this audit, but Tyson didn't really take it very well. They defeated the proposal. But among the voting, even though the proposal received only 12% of the votes, it got 54% of the independent votes of investors. And so, that speaks a lot about how people really are trying to push Tyson to do better. But Tyson is still denying or not taking responsibility to prevent this from happening in the future.

ES: What is next on pushing for accountability?

ML: We are talking with investors, with the faith leaders, because obviously a large number of those investors come from different congregations. So we are trying to organize more faith leaders to support the workers. 

Tyson claims to be a Christian company, that they have Christian values. And so the investors, these religious faith leaders, are pushing Tyson. But Tyson is pretty much cutting the conversations with them. They are not really listening to the faith leaders that are trying to improve the company's practices. 

ES: Could you tell us a bit more about your organizing model? 

ML: For us, centering the voice of the workers in the work is crucial. They know the solutions to those problems that often the company really doesn't want to listen to. The company keeps seeing them as if they don't have enough education or if they are expendable. But really, workers are the experts on the jobs and they know the hazards and how to prevent accidents. So for us it also has been crucial to learn from workers who have been on the ground organizing for many more years.

In regards to it’s shareholder proposal, American Baptist Home Mission Society (ABHMS), stated: "As a faith-based institution, the American Baptist Home Mission Society is committed to advancing human rights and racial equity in our Common Investment Fund portfolio companies. The recent revelations of illegal middle school child labor in Tyson’s plants performing and being injured from hazardous cleaning duties combined with the allegations of vulnerable immigrant children catching chickens on Tyson’s contracted chicken farms, are unacceptable. As long-term investors with Tyson, we demand that the Company effectively investigate these matters and provide remedy to the affected children."

Tyson Foods maintains that it is a “faith-friendly” company and only works with business partners that do not tolerate child or forced labor in it’s supply chain.

Why Grocery And Pharmacy Workers Oppose The Kroger/Albertsons Merger

The FTC is weighing against the Kroger/Albertsons merger. Why? The $24.6 billion deal will create a grocery chain with over $200 billion in annual sales. With nearly 5000 stores, 700,000 employees and 15% national market share, the roll-up will include dozens of familiar banners, including King Soopers, Fred Meyer, Harris Teeter, Vons, Vitacost, Randall’s, Haggen, Shaw’s, Jewel-Osco and Safeway. The combination will be second only to Walmart/Sam’s Club in grocery volume and enable just 4 chains to control 60% of grocery sales in the U.S. After years of price inflation enabling record profits and stock buybacks, there is significant pushback to the merger.

In an attempt to satisfy regulators, Kroger and Albertsons will spin off over 400 stores to C&S, the industry’s largest privately owned wholesaler. C&S also operates 160 grocery stores on the east coast, including Piggly Wiggly and Grand Union. The divestments will mostly occur on the west coast, including Ralph’s and QFC, where KrogerKR and AlbertsonsACI have higher combined market shares.

We spoke with two grocery workers in Los Angeles about the merger and the spin off. Jessica Crowley is a retail pharmacist at Pavilions (Albertsons) and Rachel Fournier is a cashier at Ralph’s (Kroger).

Errol Schweizer: What are your general thoughts about the potential Kroger-Albertsons merger?

Rachel Fournier: The idea of Kroger and Albertsons, which are already humongous companies, merging to become one gigantic corporation that we would have to negotiate with is kind of scary for us. I know that from participating in the last contract and seeing how that went. I just imagine that if we're just staring at Kroger across the negotiating table, they're not really going to have any incentive to give us anything that we ask for. They'll be able to stonewall us. We wouldn't have gotten the kind of raises that we did get.

Jessica Crowley: I have major concerns from the pharmacy perspective and a patient access point. So I'm sure you've probably been aware of everything that's been happening in retail pharmacies across the country. There have been closures in every single state. I've had three pharmacies close near my store in Los Angeles in the last year, and I expect that to continue. So with the potential merger, I'm majorly concerned that there will be less competition. I will just give a couple examples just from the pharmacy perspective. 

Ralph’s and Albertsons use two different wholesalers to buy their medications from. There have been major back orders and medications that are unavailable, but the benefit of having different pharmacies use different wholesalers is if I don't have the medication at my store, there may be a Ralph’s nearby where a patient can go and get it from some other wholesaler. So when you merge two companies, that access is going to be reduced. The other thing that comes to mind is in 2023, Kroger decided not to contract with a pharmacy benefits manager called Express ScriptsESRX. So in my pharmacy we ended up absorbing a lot of patients who had previously gotten their prescriptions at Ralph's (a Kroger subsidiary) because it was no longer covered by their insurance if they continued to fill it at Ralph's. So if that happens in the future or if there's some sort of merger, we're limiting patients’ options of where they can actually access their medications and get it covered by insurance. So we're potentially creating pharmacy deserts. And this tends to happen in areas that are low income, that are predominantly Black, Latino and Indigenous.

ES: Recent research shows that the merger could put downward pressure on wages and benefits and reduce worker bargaining power. Could you just give us an idea of what you were bargaining for in the last contract?

RF: Some of the things that we were focused on were, one, obviously, our wages had fallen way behind. We were trying to reduce the gap between the two-tier wage system so that people would have a livable wage. And we were concerned coming out of COVID with safety procedures and having a voice in our stores to address safety. And during the contract negotiations, it was surprisingly difficult to even get the companies to agree to just have a couple of employees have a safety meeting every month. And then they dug their heels in even worse on the wages. They did not want to give us near what we were asking for. 

If this merger goes through, they are just going to give us these take it or leave it offers. You're going to have more strikes that last a longer time because the company doesn't have a competitor that they're worried about. It's not only going to affect union workers, but when union workers can't win those kind of economic increases it affects other people in the industry, too, because our competitors who are non-unionized, they have to also step up and increase the minimums that they're giving to their employees. It's going to affect the entire economy.

ES: What is your experience negotiating around wages and working conditions for pharmacy workers with Kroger and Albertsons? 

JC: Our negotiations actually started with grocery and continued on for six months of brutal back and forth, really no give at all. I mean, for the majority of the negotiations, they were unwilling to move even pennies. I think they were offering us like $0.10 raises when the majority of Americans got their COVID 19 vaccines in a pharmacy. And so it really felt like an insult to not recognize how essential we are and how much we did for the entire country to keep people safe. But ultimately, we did get some safety language. And we were able to get more reasonable wage increases, but it really came from the pharmacies coming together, something you don't see very often. 

And we're seeing it now with CVS and Walgreens pharmacists. They're doing walkouts across the country. It's really the first time in history that that I'm aware of where pharmacists have come together on such a great scale, because the working conditions in pharmacies are just getting worse and worse over time. They're asking for us to do more, do it with less help. The bottom line is that the companies care about what's going to make them more profitable rather than what's actually best for the patients and for their workers. 

ES: What do you think about the spinoff plan, that Kroger and Albertsons will be divesting stores to C&S Wholesale, including 66 Ralph’s stores?

RF: Well, with Haggen in 2015, in order to satisfy the regulators (during the Safeway merger), Albertsons promised to spin off a number of stores to a potential competitor. And within a few months they were closing stores, going bankrupt. Haggen wasn't a real competitor. They didn't last. And people ended up losing their jobs, their pensions, their peace of mind. They (C&S) don't have a lot of experience running grocery stores. They have almost nothing out on the West Coast where I work. I just don't see how 66 stores that are basically new to the industry are really going to compete.

JC: From the pharmacy perspective, the idea that a wholesaler would come into the pharmacy business is just absurd. It is so complex. It's changing every day and there are so many systematic issues within the existing pharmacy structures. There is no way that their pharmacies are going to last. And that's just going to result in pharmacy closures. A lot of rural areas, especially in California, their local pharmacy is within the grocery store. So if that doesn't last and if they don't have access to it, they have no alternatives to get their medications. 

ES: These divestiture plans reminds me of Charlie Brown and Lucy with the football. What can be done here? Because this merger has not been finalized. Multiple state attorneys general, legislators, independent grocers, unions, even produce suppliers have spoken out against it. 

JC: You'll be surprised at how many people have gone through similar mergers before and they'll tell you how terrible it was for them at the time.

RF: We do have a website called No Grocery Merger, and that has some activities that you can do to speak out against the merger. You could contact your elected officials, your state attorneys general. The website has a form letter that you can sign on to. That's directed to Lina Khan, who is the head of the FTC, and the regulators under her to deny the merger.

What The FTC Lawsuit Against Kroger Could Mean For Grocers

The FTC has filed a lawsuit to stop the $25 billion KrogerKR-AlbertsonsACI merger. The historic lawsuit rigorously documents how the 5,000 store, 710,000 employee mega-deal will eliminate competition, create higher prices for consumers and reduce wages for workers, especially by harming collective bargaining power. Labor unions, growers, and elected officials have echoed these concerns. Eight states’ attorneys general, along with the District of Columbia, have joined this federal lawsuit, which may be the first road test of the FTC’s new merger guidelines. It may also be a turning point for a heavily consolidated industry.

Kroger claims the deal will help them compete with Walmart. Yet the result of a successful merger would mean the top 3 grocers could account for over 50% of all grocery sales, further reducing choices for workers, consumers and suppliers. The lawsuit may create space for a grocery industry beyond mass consolidation. This future could instead be cooperative.

The grocery industry is heavily consolidated among a handful of chains. The top 5- Walmart, Kroger, Albertsons, Costco and Ahold - are close to 65% national market share. Walmart alone has increased market share from 28.4% to over 30% since 2021, mostly at the expense of supermarkets. While the Kroger merger has dominated headlines, Walmart is the true center of gravity in the grocery industry. Walmart impacts pricing, wage levels, supplier priorities and production methods across the industry. Walmart is an EDLP (Every Day Low Price) retailer with tremendous leverage over suppliers, demanding the lowest costs every day. Walmart realizes it is a risky partner and doesn’t want to be more than 30% of any given supplier’s business. When Covid-19 crippled ocean freight timelines, Walmart contracted for its own shipping fleet. When other grocers run out, Walmart stays in stock, usually at the expense of competitors without such leverage. The chain mandates over 98% fill rates from suppliers.

Kroger, as the #2 chain at 10% national market share, is a unique competitor to Walmart. Kroger went on a buying spree over 20 years ago, snapping up leading regional chains to form a national footprint. Kroger’s partnership with dunnhumby in the early 2000’s transformed their business model with leading consumer data insights. The launch of new store brands, such as Simple Truth, helped Kroger face off with Walmart on price and assortment, while stealing share upmarket from Whole Foods. In the process, Kroger became the largest health food chain, pressuring Whole Foods’ margins and forcing the sale to AmazonAMZN in 2017.  

This retail consolidation among a handful of chains enables concentration further back in the supply chain, from CPG, to wholesale, to growers. The top 4 yogurt companies control 75% of sales and the top 3 cereal companies control 90% of your crunchy breakfast options. Concentration means more uniformity among fresh products, elbowing out smaller, diversified growers. If you like the same 5 kinds of apples all year round, well, then you are in luck. Concentration also means lower wholesale costs, a cost factor usually invisible to consumers. While larger chains like Walmart and Kroger can leverage store count, market density and sales volumes to ensure lower logistics costs, smaller chains without such efficiencies can sometimes rack up 3-5 times such costs. A supplier selling the same item at $1.00 wholesale to both a mass merchant and a small independent can end up with retail prices as far apart as $1.40 and $2.25, just due to different markups. Robinson Patman is an antitrust law that mandates suppliers offer all retailers the same terms regardless of scale but is eclipsed on a daily basis in the grocery industry.

These economies of scale enable Walmart, Kroger and a handful of other mass merchants to dominate market share in dozens of metro areas. In Chicago, Jewel-Osco (Albertsons), Walmart and Costco take almost 50% market share. In the DFW metro, Walmart, Kroger and Target take nearly 50%. Austin may market itself as “weird”, but 75% of its grocery market share is just H.E.B. and Walmart. Denver is a Kroger town, with its King Soopers at over 33%. Salt Lake city is likewise with Smith’s. In Southern California and Seattle, Kroger and Albertsons take 40% and 50% respectively. And Walmart has greater than 50% market share in dozens of cities across the southern and midwest heartland. There are a few exceptions to such market concentration. Publix dominates Florida and Market Basket is the most beloved in Boston. But most of the time, grocery is already the Walmart and Kroger show. 

The New York City metro is a unique outlier. No retailer has a commanding presence. While Stop and Shop (Ahold), Costco and Albertsons (Acme, King’s) may be significant players, the solid market positions of Food Bazaar and thousands of independent corner store bodegas and green grocers help give customers and retail workers more options. But what really sets the New York metro apart is the long term success of retailer-owned cooperatives such as Wakefern, Allegiance and Key Food. These unionized grocers have survived and thrived through banding together to share products, services and expertise. 

Cooperatives are unique in that they take different forms, including independent owner groups, consumer cooperatives and worker ownership. Cooperatives have their own 8 point code of honor, respected worldwide. By maintaining a balance between individual liberty, enterprise independence and collective security, cooperatives distribute wealth and power in a much more equitable fashion than typical corporate structures. Cooperatives leverage scale by buying and/or contracting for billions of dollars of goods and services for their members.

This is why wholesale and retail service cooperatives set New York apart from other metro areas. Wakefern, based in New Jersey, is the largest retailer-owned supermarket cooperative in the U.S., with over $18 billion in sales and over 362 stores, including ShopRite, PriceRite and Fairway Markets. Over a dozen chains in New York also belong to Allegiance Retail Services, including Pathmark, D’Agostino’s and Foodtown. Key Food is a $4.5 billion cooperative that owns over 17% of NYC market share, with dozens of stores in diverse, working class neighborhoods across the 5 boroughs.  

Outside of the northeast, facing off against Walmart and Kroger, Associated Wholesale Grocers is a $10 billion retailer-owned wholesaler servicing over 4000 stores across 36 states. Likewise, INFRANFRA is a $2 billion retail services cooperative of over 500 small format, independent and worker owned natural products stores. Across the pond, the Mondragon worker cooperative complex in Spain operates over 2000 stores, including hypermarkets, grocery stores, gas stations, and even perfume stores. And in Austin and central Texas, GAMA is an immigrant owned wholesale cooperative servicing hundreds of gas stations, bodegas and corner stores.

Consumer cooperatives are another format, owned and governed by local community members. Park Slope Food Co-op, PCC Natural Markets, Wheatsville Co-op, and Mississippi Market are all consumer cooperatives, in Brooklyn, Seattle, Austin and St. Paul, respectively. Consumer cooperatives in the Twin Cities area even have their own wholesaler, Co-op Partners, which specializes in buying from local growers and manufacturers. And also based in St. Paul, National Cooperative Grocers (NCG)  services over 200 consumer cooperatives with over $2.5 billion in combined sales. NCG negotiates lower costs, wholesale contracts, product promotions, marketing and new item placements for member stores that compete head to head with Kroger, Sprouts and Whole Foods. NCG is a stateside version of an even larger cooperative phenomenon.

Internationally, the consumer cooperative sector holds significant grocery market share in many countries. There are over 4000 such stores in the U.K., with 4 million members and 6.6% market share, and is among the top 10 grocers. In the Netherlands, there are 550 cooperative stores with 10% market share, including Walmart-style hypermarkets, corner stores and discounters. Cooperatives dominate Switzerland, with over 2500 stores, Italy with over 1600 stores, and France, with over 1600 stores. Scandinavia is particularly cooperative focused. Norway has 1300 stores at #1 in market share, while Sweden has 760 stores with 36% market share. Denmark has 770 stores at #2 in market share. Finland is a grocery cooperative mecca. S Market is #1 at 46% market share, with 2.4 million members and “an economy based on mutuality”. The Denmark based Co-op Trading is a larger Scandinavian version of NCG. Co-op Trading supports 4500 stores and 13 million members with multiple brands of private label as well as crucial retail services. In Japan, over 312 consumer cooperatives and 30 million members belong to JCCU, which likewise provides store brands, retail services and policy advocacy for member stores. 

Cooperatives are by no means utopian, but they are a compelling alternative to concentration of ownership for the grocery industry. Cooperatives mean that a handful of shareholders like the Walton family aren’t hoarding all the gains while keeping wages low and causing widespread worker food insecurity. Cooperatives allow for greater employee choice in where to work, increasing the bargaining power of workers. They enable a greater variety of retail customers for growers, and are more focused on localization of supply chains. They lean into building long term supplier relationships, not  “churn and burn” category management with sky-high slotting fees and 60-70% annual new product attrition that some national grocery chains are known for. Most importantly, cooperatives enable more consumer choice in where to shop. These options mean that no one company has ultimate leverage over the supply chain, including what is produced, how it is grown and how low the prevailing wages will be set. Any major shifts in the grocery industry, such as fair pay, scaling up regenerative and organic production, healthier packaged foods, more fresh products, less factory farmed meat, are more likely in a cooperative ecosystem.

Evolutionary biologist David Sloan Wilson even makes the scientific case for cooperation, “It is broad scale cooperation that is the source of prosperity in human societies”.

The historic lawsuit by the FTC, the District of Columbia and states including Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming is a major step in stopping grocery consolidation, while protecting workers and consumers. It should be a prelude to further antitrust activity, including breaking up Walmart. In doing so, it may open the door for a more cooperative future for grocery.

Why Your Groceries Are Still So Expensive

Grocery prices are 30% higher than four years ago. In the wake of World War II, the grocery industry was born to ensure a cheap, convenient and abundant food supply. Decades later, the same industry leveraged pandemic-related supply chain crises to raise prices and reap enormous profits, all while selling less food. Sustained higher prices are not only a burden on consumer budgets, but are also an ongoing policy failure by the Biden Administration.

The U.S. grocery industry is a $1.03 trillion behemoth. According to data shared exclusively with me by NIQ, across all grocery categories in all channels of trade, prices are up nearly 30% since 2019, while unit volumes are flat. What does this mean? Average shoppers are spending more money and coming home with less food. And Ozempic has nothing to do with it. 

Despite the illusion of variety, most grocery categories are dominated by a handful of consumer packaged goods (CPG) companies that own troves of familiar brand names.

Soft drinks provide a textbook example of CPG domination. The top 3 companies, Coca-ColaKO, Pepsico and Keurig Dr. Pepper, control around 90% of the soda market. Overall, soda sales are up 56%, unit volumes are down 2% and prices are up 59%. In Q1 2023 for example, Coca-Cola prices were up 9%, and Pepsico prices were up 16%, while unit volumes were down 2%. Pepsico more recently posted a 21% rise in operating profit to $970 million, with a 6% volume decline after double-digit price increases for 7 consecutive quarters - nearly 2 whole years. As an executive bluntly stated, “I still think we're capable of taking whatever pricing we need.”

Kraft Heinz dominates the packaged cheese category at 65% market share. Category unit volumes are up just 6%, while prices are up 21%. That is exactly the intention. "We are not going to be chasing volume," according to the Kraft Heinz CEO, "We're going to be looking to drive profitable volume."

In 2022-2023 Kraft Heinz profits skyrocketed from $225 million to $887 million, an increase of 448%. Gross profit margins reached 34%, up 400BP over Q3 2022. 

Similarly, chocolate candy sales are up 34%, unit volumes are down 8% and prices are up 46%. The top 3 companies, including Hershey’s, Mondelez and Mars, possess over 80% market share. Hershey’s CEO said in 2022, “Pricing will be an important lever for us this year and is expected to drive most of our growth.” Hershey’s saw a 62% increase in profits in 2021. Hershey’s 30 brands control at least 46% of the candy category.

Boxed cereal dollar sales are up 17%, unit volumes are down 12% and prices are up 33%. The top 3 brands, General MillsGIS, Kellogg’s, and Post HoldingsPOST, possess over 70% market share. “It’s been surprising how resilient the consumer really is,” stated Kellogg’sK Chief Executive Steve Cahillane in 2022, without a hint of irony.

Beef demand is highly elastic. As prices go up, volumes go down. According to NIQ, beef unit volumes are down 14%. Prices have gone through the roof, up over 50% in just 4 years. The average beef price per pound is now over $7. So it wasn’t Impossible Burger or cultivated lab meat that killed demand. And no wonder. The top 4 meat processors hold around 50% market share. Tyson FoodsTSN doubled its profits from 2021-2022, dryly stating in an earnings call, “Our pricing actions, which partially offset the higher input costs, led to higher sales during the quarter.”

Diaper unit volumes are down 11.7% while prices are up 38%, to over $13 a pack. Proctor & Gamble (P&G) and Kimberly Clark control 70% of the domestic diaper industry. P&G prices have stayed high while lower input costs drove 33% of their profits. The brand predicted an $800 million windfall, and an executive recently mentioned, “We continue to believe that the majority of that growth will be price driven with a negative volume component.” 

The NIQ data also articulates an important pattern. Further processed commodities show higher price spikes than their base ingredients. Milk unit volumes are down 5.8% and prices are up 23.8%, while yogurt unit volumes are down 10% and prices are up over 47%. Yogurt is also heavily concentrated as an industry, with the top 4 companies, Danone, General Mills, Chobani and Lactalis, possessing over 70% market share. Potatoes also illustrate this trend. Fresh potato unit volumes are up just 3%, yet prices are up 31%. Potato chips unit volumes are down 3.5% and prices are up over 43%. And most shockingly, especially for lovers of tater tots, frozen potatoes are up over 65% in price. 

Price hikes have also taken the form of smaller pack sizes at the same price, a practice known as “shrinkflation.” A study from the office of Senator Bob Casey found shrinkflation in many categories, such as household paper products, up 35% in price with 10% shrinkflation; salty snacks, up 26% in price with 10% shrinkflation; and cleaning products, up 24% with 7% shrinkflation. 

Much Of This Pricing Activity Can Be Explained By Sellers’ Inflation

This is pressure from suppliers to increase prices. How? Professor Isabella Weber explains “that supply shocks allowed corporations to tacitly collude, hike prices, and rake in record profits…This is a form of implicit collusion,” she said. “Firms do not even need to talk to one another to know that a cost shock is a great time to raise prices.”

Alex Turnbull, a commodities analyst, echoes this, “When you go from 15 to 10 companies, not much changes. When you go from 10 to 6, a lot changes. But when you go from 6 to 4 – it’s a fix.”

And the record profits Professor Weber mentions? Groundwork Collaborative recently found that corporate profits accounted for 53% of 2023 inflation. EPI likewise concluded that over 51% of the drastically higher inflationary pressures of 2020 and 2021 were also direct results of profits. The Kansas City Federal Reserve even pegged this around 40%, indicating that sellers’ inflation is now a pretty mainstream idea.

Workers Get Disproportionately Blamed For High Prices

Typical inflation dogma is that consumer demand and labor costs drive inflation. Like Larry Summers would say, blaming business for it is “bad economics.” These orthodoxies are not supported by the math. Corporate profits as a share of the national income are at historic highs, while workers’ share is lower than before the pandemic. And labor shortages get a lot of media attention. Retail labor costs increased as food workers demanded better pay and benefits after getting stressed out, sick and even dying at work during the pandemic. But even if retail labor costs went up 50% across the board, this would result in price increases of just 5-10% at grocery stores, hardly justifying the price hikes in steaks, yogurt or hash browns.

While workers get disproportionately blamed for high prices, Wall Street profit rates are the highest since World War II and stock buybacks are at record highs. Walmart’sWMT Walton family has a combined net worth of over $238 billion, increasing by $8.8 billion from 2020 to 2022. The Mars family added $21 billion to their fortune from 2020-2021. Food and agriculture billionaires added $400 billion to their wealth from 2020-2021, with Covid-19-related food inflation creating over 60 new food billionaires. Sellers’ inflation is Robin Hood in reverse: massive wealth concentration bankrolled by consumer spending on necessities.

Up to 4 out of 5 consumers believe that “greedflation” is rampant. Consumers are still citing food prices as their number one economic concern: 94% are worried about food prices. Share of income spent on food increased 13% in 2022. Two thirds of consumers are spending significantly more on groceries than last year. US household purchasing power slipped 7% in the first half of 2023. Over 70 percent of Americans are financially stressed, with 58% living paycheck to paycheck. Food insecurity impacts 27 million Americans, up 12% over the last year. Meanwhile, high-interest rates, rising debt, historically high housing costs, resumption of student loan repayments and reductions in SNAP benefits are squeezing household budgets. More than 40 million people fell below the poverty line in 2022. The economy is softly landing on the backs of the working poor.

So where is this heading? The USDA thinks prices may come down a half percent or so in 2024. The two measures of food inflation, or the rate of price increases, the CPI and the PPI, have both come down since January 2023. But the CPI still sits stubbornly higher by 1-2% every month. Even in June, when the PPI nearly zeroed out, the CPI remained above 3%. This means that the rate of price increases passed on to consumers continues to exceed price hike rates received by manufacturers. Sellers’ inflation in a nutshell.

It Doesn’t Have To Be This Way

While a growing number of U.S. grocers have been pushing back on price increases, the French government secured lower pricing pledges from 75 food conglomerates that produce over 80% of groceries. The French government has threatened to claw back profits from violators. With the support of the French government, mass market grocer Carrefour dropped several Pepsico products over price hikes. Tesco resolved a pricing dispute with Kraft Heinz after the CPG giant stopped shipping products to the chain, a week after Mars resolved a similar dispute. Mondelēz resolved a spat with Belgium grocer Colruyt after the retailer stopped sales of Oreos. Mars also stopped delivery of 300 brands to German discount chains when the retailers refused to pass price increases on to customers. In Austria, a coder built a simple online tool to track price changes at supermarkets. Maybe the USDA or FTC could put that fellow on retainer.

For Congress and the Biden Administration, which have more recently taken a harder look at price inflation, this is a missed opportunity.

So what now? Over 80% of voters want lawmakers to crack down on corporate price gouging. Washington State is sending checks to low-income consumers, funded by price-fixing settlements with poultry and tuna companies. At the federal level, Congress could summon food executives to Capitol Hill and claw back price-inflated earnings. The USDA and FTC could scrutinize the practices that CPG, retail, and wholesale oligopolies employ to elbow out smaller competitors, starting with slotting fees and “category captain” arrangements.

The FTC, which recently published ambitious M&A guidelines, could investigate food price hikes under Section 5 as an “invitation to collude.” The FTC and DOJ could actually enforce Robinson-Patman to police how bigger chains demand better deals, fill rates and payment terms at the expense of competitors. Or regulators could tweak the Sherman Act and police pricing on behalf of consumers. Congress could universalize SNAP and subsidize the difference that households are spending on groceries now versus in 2019. Or for just $80 billion or so, they could make fresh produce free. Such “culinary Keynesianism” sounds steep, but would still be a lot less expensive than the bipartisan $150 billion increase in federal military spending since 2019. 

Beyond scolding food executives, there is plenty that Congress and the Biden Administration could do to make food affordable. But for the time being, missed opportunities mean prices will stay high. Millions will struggle to afford to eat. And so, cheap food is dead. RIP Cheap Food.

How To Make Groceries Affordable Again

Unemployment is low, real wages are up and the economy is growing. Inflation is down but food prices are still really high. Coupled with the elimination of pandemic-era social programs such as the Child Tax Credit and emergency SNAP allotments, things just don’t feel that great for millions of Americans. Food inflation could be the rocket fuel that instigates big changes in the food industry.

Inflation, or the rate of annual price increases as measured by the consumer price index (CPI), has slowed to low single digits. But grocery prices are up over 30% since 2019. Over 90% of consumers are concerned with high food costs and 70% are financially stressed. The share of income spent on food increased 13% to the highest rate in 30 years. Food insecurity rose 18% in the last 2 years, affecting 17% of all Americans. And 37% of 18-44-year-olds are skipping meals. Market research firm Dunnhumby pulled no punches reporting that, “our research has also shown that 18-44 year-olds are at the epicenter of a food and financial insecurity crisis that shows no signs of abating.” How did we get here?

A primary cause of price inflation is profiteering enabled by grocery market concentration. It is nearly impossible to not buy food from grocery and consumer packaged goods (CPG) oligopolies. Processed foods make up over half of what is sold in the $850 billion grocery sector. Whether it is meat, poultry, bread, cereals, canned soup, snacks, condiments or beverages, these categories are typically dominated by 3 or 4 companies with multiple brands. We all know and love them: Oreos, DiGiorno, Sprite, Cheetos, Lucky Charms. They are formulated to hit the bliss point and built to limit competition through aggressive marketing and by literally paying for shelf space. This dominance enables a small handful of brands to price signal. So when one category leader raises prices to protect their profit margins from rising costs, the rest follow without fear of losing customers. 

From 2021-2023, these wink-and-nod price hikes meant that consumers paid for cost increases above and beyond what brands received from their suppliers, enabling historically high profits. According to Nielsen IQ,  CPG prices outpaced the rate of inflation by several points for the last two years, with the gap actually growing more recently as the CPI cooled off. This “price over volume” strategy lowered industry unit volumes, meaning consumers are buying less while spending lots, lots more.

This has been coined “seller’s inflation” by University of Massachusetts professor Isabella Weber, “Publicly reported supply chain bottlenecks and cost shocks can also serve to create legitimacy for price hikes and create acceptance on the part of consumers to pay higher prices, thus rendering demand less elastic.” In other words, pricing had little to do with supply or demand, which is why interest rate hikes made no sense.

Retailers took advantage of the inflationary moment. One CPG brand selling to an AmazonAMZN division passed on a cost increase of 20% and reportedly watched their retail prices shoot up 50%. WalmartWMT is the largest grocery chain in the US, with nearly 30% market share. From April 2019 to summer 2022 the mega chain raised thousands of prices on a cost-per-ounce basis, including Great Value potato chips by 35%, Pepperidge Farms Cookies by 62% and Great Value Yogurt Cups by 93%. AlbertsonsACI is the third largest U.S. grocery chain and currently in merger talks with its larger rival KrogerKR. At select Albertsons stores in the same timeframe, a basket of like items on a cost-per-ounce basis jumped by over 75%, including private label Signature Vegetable oils up 117%, Signature Potato Chips up 68%, and Lucerne Cheese up 125%. It is impossible to guess how much of these price increases were pass-through or profit-taking. But Walmart, Albertsons and Kroger combined account for over 45% of all U.S. grocery sales. Their earnings reports documented billions of dollars in windfall profits yielded to investors. Consumers therefore paid higher prices out of pocket to fund the dividends and buybacks distributed upwards to shareholders, the highest in decades. It is Robin Hood in reverse.

The chief global economist at UBS AG called this “profit-led inflation”. The European Central Bank, the OECD and the European Commission all published studies on it. Going one step further, the International Monetary Fund linked corporate profits to 40% of price inflation while the Economic Policy Institute documented over 50%. 

This is why grocery industry comparative sales have, not surprisingly, cooled significantly. Sales growth of 3-4% is barely level with inflation. Discounter chains on the other hand are going gangbusters as consumers look to stretch their dollars. Leading discounter chain Aldi just acquired 400 Winn Dixie stores, seeing long term market share potential by underselling Publix. Over 9 in 10 consumers are bargain hunting and private label sales have soared to over $230 billion a year. But the grocery industry also has an image problem, with 4 out of 5 consumers believing that brands are involved in “greed-flation”. Shoppers believe that grocery chains have over 35% profit margins, nearly 14 times their actuals. 

So will the grocery industry lower prices as input costs cool? That depends. Many high-profile retailers have asked suppliers to stop pushing cost increases. One promising example came from Town and Country, a family-owned chain in Seattle. In April 2023, the head of purchasing called on suppliers to partner together to lower prices and “to find ways to give all members of our community access to the best food options for their families.” 

Retailers have other tools at their disposal to mitigate price increases. They can negotiate everyday low costs on best sellers. They can eliminate slotting fees and require brands to instead invest the funds in lower costs. They can break up CPG monopolies on their own shelves and spur competition. They can also choose to invest in lower prices out of their own gross margins. But that doesn’t mean prices will come down to 2019 levels.

Any price reductions will have to be tracked closely so they are not cannibalizing top-line sales and gross margins. If average input costs drop 30% to 2019 levels, retail prices should come down by 30%. But that would also mean revenue would drop by 30% unless there was a corresponding increase in units. That elasticity in demand would be asking a lot of cash strapped customers.

As input costs come down, grocers will instead play with pricing to spur demand. They will run more short term price promotions. They will expand store branded private label to enhance their value image. And CPG’s will play with “price-pack architecture” to create illusions of value. It will just be rearranging deck chairs.

Until the Covid-19 pandemic, the whole point of the profit-driven capitalist food system, of Big CPG, large-scale food processing and consolidated grocery, was cheap, abundant, convenient food for everyone. Despite the (ahem) occasional externality, it worked really well for a long time. Is that really the case anymore? Food is expensive, not always accessible, but still quite profitable.

The Biden era has not just been characterized by high inflation, but also by policy aligned with growing union support, greater antitrust sentiment and action, and some meaningful new USDA programs. Along these lines, maybe all major companies should be required to have board seats reserved for rank-and-file workers. This could enable some oversight over pricing and profit-taking. And U.S. antitrust policy such as Robinson Patman is built around pricing. It is meant to regulate how retail chains leverage scale to extract greater discounts from suppliers at the expense of competitors. Enforcing Robinson Patman alongside the new FTC/DOJ draft merger guidelines could be a healthy start.

Price controls are a logical next step. In the UK, price control debates have followed similar policies in France, Hungary and Bolivia, among administrations with vastly different ideologies. The centrist French government has secured lower pricing pledges from 75 food conglomerates that make over 80% of groceries. The French administration has threatened to claw back profits from violators. The socialist Bolivian government has negotiated stable prices with producers and the conservative regime in Hungary froze prices on hundreds of basic items. In the U.S, it would not be difficult for regulators to access syndicated pricing data to protect consumers, penalize price gougers and spur greater demand.

And with the Farm Bill up for renewal, it’s time again to look at how public subsidies prop up industrial food. The Vilsack USDA has made moves to reform supply chains, particularly in meat processing, regional food marketing and organic crop production. GMO corn and soy tend to get a lot of well-deserved scrutiny in these debates, but food security is a much bigger USDA program. Over $100 billion in SNAP and WIC redemptions were rung up by grocery retailers last year. So while healthy food is still considered a luxury by most Americans, why not instead make it free for everyone? 

As researcher Ken Kolb states in Retail Inequality, “Instead of supply-side solutions that subsidize businesses, we should use those funds to improve the buying power of community members”.

One possibility is “single payer produce”. Public funds could fully subsidize the point-of-sale price of fresh and minimally processed fruits and vegetables, above and beyond SNAP and WIC. This could be transformative. It would mean operationalizing healthy food as a human right without reinventing supply chains. And public oversight with Good Food Purchasing standards could require farmers to be paid fair prices and in turn, be required to pay fair wages. Single-payer produce could offset much of the price inflation from processed foods and radically change consumption habits. And grocery stores would have to evolve their merchandising priorities, staffing and layouts to reflect the uptick in fresh product sales. 

Profit-driven price inflation has been a huge burden to consumers. It may have permanently disrupted the status quo of cheap and convenient industrial food. But assuring fresh, healthy groceries for all could transform the industry into something new and wonderful.

What Does 2023 Have In Store For The Grocery Industry?

2023 will be a challenging year for food retail and CPG, but what else is new? Nearly 3 years into a pandemic-induced hangover, the grocery industry continues to undergo enormous shake-ups, evolution and corrections.

Inflation Nation

Food price inflation (CPI) still sits above 10%, the highest in decades. In 2020, Covid-19 shut down vast swathes of the economy. Commerce then restarted with radically different consumption patterns, which continue to this day. Fragile, Just In Time supply chains were built for financier-friendly predictability and just couldn’t handle the new reality. Extreme weather events affecting harvests, avian flu causing poultry culls and Russia’s invasion of Ukraine have piled on. Rampant profiteering by railroad, ocean shipping, fertilizer, grain trading, meat processing, manufacturing and retail conglomerates, has contributed over 50% of price hikes while lining shareholders’ portfolios. The Federal Reserve has raised interest rates 7 times in 2022, and has promised additional hikes in 2023, based on outdated assumptions that working Americans have too much earning power and savings. Would you nuke a forest fire? Monetary policy is meant to stabilize prices and labor markets, and so far, there’s not much stability, just plenty of fallout.

Dollar Dollar Bill, Y’all

What does this mean for emerging food enterprises? Money will stay expensive and investors will be more hesitant to throw funding at food innovation. In the immortal words of Wu-Tang Clan- that would make Karl Marx blush with materialist envy- “cash rules everything around me”. Surviving 2023 means prioritizing cash flow and stopping the bleeding that, until recently, was encouraged by investors in the name of rapid growth. Growth capital won’t be impossible to come by. But it won’t be easier, particularly with more “vulture” capital seeking fresh carrion and “down rounds” becoming more common in financing. What a difference a year makes.

The challenges with this new reality are sundry. More trade spendsurges will be implemented by larger manufacturers who took price hikes and have a glut of inventory leftover due to lower consumer demand. Customers are buying less after 18 months of pass-through cost increases and long-gone stimulus money. Retail sales dollar growth is exceeding unit growth, which has cycled negative in many companies. Retailers are reacting by pushing more private label and demanding higher slotting fees to milk more revenue from suppliers. Pay to play always benefits economies of scale. And despite over 80,000 food industry job openings, recent layoffs at Walmart, Pepsico, Misfits/Imperfect Foods, Motif Foodworks, Go Puff, DoorDash, General Mills, Coca-Cola, Beyond Meat and Impossible Foods signal that a “growth recession” has already hit the food industry.

But John Foraker, the CEO of Once Upon A Farm and former CEO of Annie’s, is optimistic about the coming year. “There is little evidence out there that consumer interest in cleaner, healthier food options abated in any material way over the past year. All the retailers I’ve spoken to over the past year are hungry for innovation and newness. In short, consumer demand for premium wellness positioned food and beverage remains very strong, both online and at retail, and retailers are hungry for it”.

Regulatory Roulette

Despite the USDA historically being a handmaiden to agribusiness, Covid-19 shortages, deaths and illnesses forced the agency to adopt a more diverse and pluralistic approach to food industry programs. Recent USDA funding to biotechnology, meat processing, organic farming transition and regional food centers will start impacting the broader marketplace. Stakeholders have started plugging these subsidies into market development, supply chains and R&D. And the USDA Farm Bill is up for approval in 2023. A coalition of food advocates, NGOs and companies is pushing for ambitious changes to farm and food policies. These include Good Food purchasing standards in federal food procurement, regenerative agriculture funding, and expanded nutrition and food relief programs. Food insecurity will continue to remain rampant unless effective anti-poverty measures such as the Child Tax Credit are renewed. The CTC cut poverty in half and reduced food insecurity by over 25%. 41 million SNAP recipients drive over 15% of total grocery channel sales, nearly 9 times the volume of all food distributed by food banks. But even the Government Accountability Office has recently analyzed USDA SNAP funding calculations as more stingy than “thrifty”.

The FDA will be under massive scrutiny after mishandling a nationwide infant formula crisis. A Politico expose detailed extensive organizational issues at the agency. And recent FDA decisions have mystified the food industry. The FDA took a tough approach to CBD consumables. Meanwhile, they were seemingly promoting GMOs despite a deeply flawed “bioengineered foods” labeling framework that exempts the majority of products containing GMOs. Various food industry stakeholders are calling for reforms, including merging FDA food supply responsibilities into the USDA.

A better-funded and strengthened National Labor Relation Boardmeans that food companies should make sure they are familiar with and in compliance with labor laws. While real wages continue to decline relative to inflation, the recent wave of union organizing has galvanized over 71% of the public supporting organized labor. And why not? Unions consistently mean better pay, safer working conditions and better benefits. While less than 8% of private sector employees are unionized, over 70% of recent union drives have been successful. Employees at Amazon, Trader Joe’s, Mom’s Organic Market and New Seasons have won unionization votes despite expensive union avoidance campaigns to convince them otherwise. Recent contract victories for UFCW, BCTGM and RWDSU locals have resulted in significant wage and benefits increases that are the envy of the industry. Or should food companies follow the example of StarbucksSBUX +0.4%? The coffee giant has fired 170 employees, shut down stores, and incurred 50 NLRB complaints and over 1000 unfair labor practice filings in a brutal attempt to stop unionization. Is that a venti latte or just a vendetta?

The renewed focus on employee well being is also an opportunity to fulfill corporate ESG commitments. Companies can support employees by foregoing captive audience meetings, voluntarily recognize unionswhen employees choose that option, and bargain in good faith. Meanwhile employers will have to boost compensation, benefits and retention strategies for over 8 million workers as more states raised minimum wages on January 1.

And food workers may benefit from funding authorized by the bipartisan WORK Act. The legislation authorizes over $50 million to seed and support employee and worker ownership. Employee ownership typically means better compensation, benefits, training and retention. A number of high profile food companies are already employee or worker-owned, including Publix, Bob’s Red Mill, Equal Exchange and King Arthur Baking Company.

The Federal Trade Commission may be making some headway in regulating heavily concentrated industries. A stronger FTC could be helpful to emerging brands and independent retailers. It’s not easy to compete and negotiate with oligopolistic meat, snack and beverage companies who dominate supply chains, shelf space and customer wallet share. While the Kroger-Albertsons merger and $4 billion investor dividend drama has drawn the most grocery antitrust attention, enforcement of the Sherman and Robinson-Patman Acts could remake the food retail and CPG landscape.

Sweat The Technique?

The Regenerative Organic Certification (ROC) will continue to emerge from the fray of regenerative rubrics. ROC has a clear framework and strong backing from industry collaborators, including retailers and brands. ROC is also rooted in organic certification. It has more in common with “deep organic” frameworks like Demeter Biodynamic and Real Organic Project than many of the corporate regenerative farmingpromises. ROC has been building a network of producers who supply an enthusiastic slate of member brands with agroecological and perennial crops and ingredients. However, price will remain a concern for inflation-weary consumers, so market penetration will be limited by affordability. And lack of inclusion of food workers in governance and oversight may also limit the transformative potential.

Next generation GMO food technology, or synthetic biology, will also gain greater market visibility. This includes cultivated meat, which was recently greenlit by the FDA, as well as microbial dairy, oil and proteins(aka “precision fermentation”), which are produced by genetically engineered microorganisms. The Biden Administration has boosted the industry with an Executive Order that mandates federal funding for R&D and market entry. Environmental claims relative to factory farmed agriculture will appeal to younger, eco-conscious and tech-savvy consumers. However, the rush to market has overshadowed a “race to mission”and questions remain about ownership, patents, pricing, scalability, waste and biohazard risks, including such recent public disclosures:

The full effects of deployment or release of our genetically engineered organisms and materials into uncontrolled environments may be unknown… Such deployment or release… could impact the environment or community generally… We work with biological and chemical materials that could be hazardous to human, animal, or plant health and safety or the environment… Our operations produce hazardous and biological waste products.

And finally, whither plant-based processed foods? While the category will continue to decline in the short term as retailers rationalize oversku’d and underperforming assortments, they still have a bright future. Fungi (ok, technically not plants), oats, legumes and adjacent ingredients will help grow category popularity and market share. And a number of companies are developing fully transparent, regenerative value chains with family farms to secure ingredient supplies and create better products. This foresight may catapult these brands to category leadership and help foment a new “climatarian” or “climavore” focus for food companies.

2023 promises to be another turbulent year for the food industry. But everyone has to eat, and most people depend on the for-profit sector for the vast majority of their calories. And factoring in a Republican-controlled House of Representatives, 2023 definitely won’t be boring in the grocery store.

Why The Federal Reserve Can’t Solve Food Price Inflation

The Federal Reserve raised interest rates another 50 basis points in January, in an attempt to tamp down inflation. Yet interest rate hikes have not yet had any meaningful impact on high food prices. The Fed can’t address a major cause of inflation: corporate pricing strategy and profiteering that is slowing down grocery sales, changing consumer buying patterns and exacerbating food insecurity.

Fed Chair Jerome Powell recently rationalized the rate hike as a way to ensure “strong labour markets”. Federal Reserve Bank President of St. Louis, James Bullard likewise thinks rates need to go up “aggressively” in 2023, potentially echoing the Volcker shocks of the 1980s which squelched the bargaining power of organized labor for a generation. Esther George, Federal Reserve Bank of Kansas City President, was surprisingly blunt, linking inflation to higher household savings, “We see today that there is a bit of a savings buffer still sitting for households, that may allow them to continue to spend in a way that keeps demand strong,” she said. Personal income and job marketoutlooks are holding steady in the meantime, while real wage growth has declined in most industries. Fed rate hikes have never been friendly to working people.

But food at home (i.e., grocery) prices continue to be elevated over last year. November food at home CPI (consumer price index) was up 12%, while overall inflation was up 7.1%. The CPI peaked in June at 9.9% while grocery price increases peaked in August at 13.5%. Thanksgivingwas the most expensive it has been in 4 decades and December holiday menus look likewise.

Price inflation has not slowed considerably because many large companies continue to raise prices higher than cost increases. About half of price inflation is due to real world factors, like avian flu (eggs, poultry), weather (potatoes and fresh produce) and supply chain fragility (pretty much everywhere). But over 54% of inflation is due to windfall profits, from food companies to fertilizer cartels to the railroadsector. All in, corporate profits hit a record $2 trillion in Q3 2022, right about the same time that the CPI hit record highs. That is not a coincidence.

Such profit inflation does not factor into the Fed calculus, but it is status quo for Wall Street. Shareholders favor firms with high levels of market concentration because they can drive up prices and increase margins without fear of being undersold. This in turn increases shareholder returns.

Earnings call transcripts are an entertaining way to see how this all plays out. CPG executives feign surprise at how well price increases have been accepted by consumers (i.e., demand elasticities). They then brag about how profitable they are and how big the dividends and buybacks will be for shareholders:

Kraft Heinz: “We’ve already increased the prices that we were expecting [to] this year, but I’m predicting that next year, inflation will continue, and as a consequence [we] will have other rounds of price increases… We have executed a new price increase in the month of August. And the elasticities turned out to be stronger than what is anticipated.”

Mondelez: “Year-to-date, we have delivered nearly $900 million in absolute gross profit dollar growth, a record high for our business, $3.3 billion to shareholders year-to-date through share repurchases and dividends. We also expect a significant contribution from pricing, and we continue to plan for double-digit cost inflation. We've announced a third round of pricing in the U.S… we still expect significant inflation in '23 and hence, the pricing rounds we have to go through.”

Pepsico: Profits were up 20% while prices increased 17% and volume slipped just 1%. “I still think we're capable of taking whatever pricing we need.” Despite this windfall, Pepsico just announced a round of layoffs, anticipating a recession and insulating their P&L from lower sales through cost cutting.

Coca-ColaKO +0.4%: Sales were “driven by pricing actions and robust volume growth” while profits spiked 14% and the company announced new “cheater” items such as smaller bottles or smaller multipacks of less cans per multipack.

Procter & GamblePG +1.2%: Sales grew 7%, with pricing added nine points to sales growth, stating “We continue to believe that the majority of that growth will be price driven with a negative volume component, as you would expect given the inflationary pressure.”

Colgate: “You’re not going to see a lot of companies chasing volume by discounting prices.”

Nestle and UnileverUL +1.1% both raised prices 10% to record levels.

Tyson: “Our pricing actions, which partially offset the higher input costs, led to higher sales during the quarter. Despite a volume decline driven by higher average sales prices last year, this time, we spent about $50 million on buybacks. This year, we've got almost $700 million.”

And speaking of higher input costs, pie shells, cereals and baked goods prices hit record levels over the holidays. Just 4 firms control 70% of the global grain trade, including wheat flour. Cargill reported record profits and a 23% increase in revenues. ADM recently saw its most profitable quarter ever. BungeBG +14.5% posted better than expected earnings. Even the normally staid Wall Street Journal noted that “Grain traders like ADM, Bunge and privately held Cargill Inc. tend to get a boost from higher commodity prices when there are shortages, geopolitical conflicts, or extreme weather events that lead to more volatility in commodity markets.” This is disaster capitalism, freshly baked.

CPG oligopolies are directly driving up the CPI, the measure of inflation consumers feel most acutely at the grocery store. Pepsico and Nestle have annual food and beverage sales around $70 billion, Tyson over $43 billion, ADM, Cargill and Coca-Cola over $30 billion and Unilever, Kraft Heinz and Mondelez well over $20 billion. Their products are ubiquitous in the food supply and price hikes are tough to avoid. Their brands monopolize shelf space and customers’ wallet share: think Fritos, Lay’s, Ruffles, Cheetos, Doritos, Tostitos: these are just a handful of iconic Pepsico brands.

And this category dominance creates a vicious cycle that keeps them on top. Price inflation and higher interest rates make investors more hesitant to invest in emerging brands that would compete on shelf with Big CPG. In turn, emerging brands don’t have deep wells of trade spend and must balance cash flow, higher costs of goods and the need for positive EBIDTA with grocery stores’ expensive slotting and promotional requirements. It isn’t pretty out there for many food startups.

But how is this set of dynamics impacting grocery stores, the main interface for customers?

US retail sales were up 7% YOY, or 1% below the CPI. This means that retail is stagnant. Dollar sales are outpacing unit growth. At grocers, the daily, weekly and monthly customer traffic is mostly down compared to 2021, according to Placer.ai. Comparative sales (comp’s) at Walmart, Kroger, Albertsons and Ahold, which account for over 45% of U.S. grocery sales, are up but still well under the rate of price inflation, so effectively negative. Like much of the industry, their unit comps are even lower, meaning a recession is already here for the sector. This hasn’t stopped retail oligopolies from passing along billions in shareholder buybacks. But it has put their pricing strategies under the microscope, particularly in light of the proposed Kroger-Albertsonsmerger. Consumers are finally reacting to price increases by reducing trips and changing purchasing habits drastically. Food retailers are getting pounded by this demand elasticity whiplash.

But comp’s are grocers’ holy grail. Once growth slows, maintaining profitability then becomes a matter of managing expenses, such as inventories and payroll. This could mean more out of stocks and layoffs. According to FMI, net profits of grocers peaked in 2020 at 3.5% and 3.2% in 2021, a 30% jump over the 10 year average, but those days are gone. Profitability, a matter of churning successively more tonnage through the same 4 walls every year, will be an even tougher challenge for the foreseeable future.

Grocery stores are hence key to the CPI leveling off. Surveyed food retailers now say they plan to pass through price changes at cost, with only 5% saying they will pad their margins by raising prices higher than cost increases. And some grocers are pushing back on price hikes where they can. That’s a big change from the last two years, when grocers bragged about the ability to harness higher margins through pricing.

Some retailers are leaning into the headwinds. Natural Grocers is focusing on fresh foods, and investing in loyalty programs and employee wages. Thrive Market is doubling down on personalization, fulfillment efficiency and customer experience. And up to 9 in 10 grocers are pushing more private label, giving them better control over supplier costs and inventories while assuring customers get lower prices.

Arun Sundaram, an analyst with CFRA Research, noted that “Food retailers are operating in probably one of the best operating environments for them in modern history. We think that the best times are probably behind [for them], and that things are going to get much more challenging down the road, especially as food inflation moderates, food-at-home demand moderates and competition continues to increase.”

But looking past grocery and CPG, what does it say about society when food consumption is trending down due to negative wage growth and high prices? This brings us back to the Fed’s interest rate tool of effectively reducing demand. It has a distinct Malthusian stench. Over 42 million Americans cannot afford to buy enough food. Over 53 million people visited food pantries in 2021. Food insecurity has doubled since pandemic stimulus programs ended and hovers at 10% nationally, while nearly 20% of Black households are food insecure. About 41 million people use SNAP, with over $110 billion in annual redemptions. Accounting for over 13% of total grocery sales, such tremendous SNAP volumes brings the grocery price inflation discussion full circle.

The Federal Reserve can’t solve food price inflation. Interest rate hikes should be off the table, but bankers are calling the shots. Meanwhile, the financial sector has reaped the windfall profits from inflation. Why poach the goose when you can keep harvesting golden eggs?

But there are other options. While a year ago price controls seemed fringe, the Emergency Price Stabilization Act from Rep. Jamaal Bowman (D-NY), made the idea mainstream. Windfall profit taxes have been implemented in India, the UK, Germany and the E.U., and were even opportunistically mentioned during election season. And if corporate agribusiness can no longer deliver what it has always promised consumers, i.e., cheap and abundant food, then maybe we need a new food industry paradigm? This could include better antitrust enforcement so that innovative new enterprises have a fighting chance against Big Food. It should also include more public investment in food systems, such as a robust public food sector that guarantees universal food access and a right to good food.

Working people can also consider collectively taking things into their own hands. Workers in locales as disparate as Bangladesh, Zimbabwe, South Korea, Tunisia, France, Spain, Belgium, Portugal, Bulgaria, the UK, and South Africa have gone on strike and walked off jobs en masse to demand higher wages that keep up with the cost of living. Maybe that’s not what Fed Chair Jerome Powell meant when he observed a “strong labor market”, but it sure beats what The Fed has been peddling.

Why A Kroger/Albertsons Merger Is A Bad Idea

Grocery giants KrogerKR and AlbertsonsACI have announced plans to merge in a $25 billion takeover deal. The combination of the retail giants would mean up to a 15% share of the U.S. grocery market, second only to Walmart’sWMT 27% share. While analysts see some upside for the companies, there are many reasons why such a merger is a bad idea.

Kroger is the largest full-service grocery chain in the U.S., and second only to Walmart in grocery sales, with over $130 billion in annual sales and over 2800 stores, including banners such as Fred Meyer, Harris Teeter, Ralph’s, King Soopers and Smith’s. Albertson’s is the fourth largest chain, and just ahead of Ahold-Delhaize, with over 2200 stores and $73 billion in annual sales, and banners such as Safeway, Randall’s, Shaw’s, Tom Thumb, King’s and Acme. Over 700,000 people are employed across the 2 chains, with over 50 manufacturing facilities and retail footprints in nearly every state and most major metropolitan areas.

Kroger’s press release put a positive spin on the deal, claiming “This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors”.

The combination would be great for investors and top executives, who have extracted windfall profits from both chains since the pandemic began, pocketing billions in dividends and buybacks. Profit margins have soared as a result of price inflation above the rate of cost increases, alongside record sales from greater consumer demand for stay at home cooking, store brands and comfort foods. 

Yet all grocery chains have had to navigate choppy supply chains since 2020, including inventory out of stocks, and higher logistics and shipping costs. A restless labor force that was traumatized by workplace illness and death from Covid-19 has been reevaluating low pay, erratic schedules and long hours, causing record levels of staff turnover and modest boosts in starting pay rates. A recent report revealed up to 75% of grocery employees had faced food insecurity as pay rates failed to keep up with housing, child care and transportation costs. A host of unions have negotiated new contracts with the chains for higher wages and better benefits. But a merger may make it tougher for unions; a 2004 grocery strike for better wages in California was squashed once Kroger and Albertsons joined forces against their own employees. Now the combine duo would become the latest private sector unionized employer. And a merger will mean large scale layoffs in redundant white collar jobs, such as office-based marketing, procurement, analytics, digital sales and category management roles.

And the combination would mean big problems for nearly everyone else in the supply chain. A merger would give the combined company tremendous purchasing power with suppliers, even if they spin off a few dozen stores to avoid the most blatant antitrust practices. A 5,000 store chain in over 48 states could more easily set payment terms, negotiate shelf space and assortment, and extract better costs and greater trade allowances for promotions, couponing, ad placement and slotting fees. Whether or not those savings get passed onto consumers is more of function of how competitive the markets are. Most likely such revenue will pad the bottom line, lining the pockets of institutional investors and asset managers who own large swathes of the stock.

Meanwhile, for suppliers, especially smaller and emerging brands, doing business with the combined chain would not get easier. Grocery shelves, while seemingly abundant with choices, are already heavily concentrated among just a handful of companies in many packaged foods categories, such as Pepsico, Kraft Heinz, Nestle and Kelloggs, as well as meat and poultry barons such as Tyson, JBS and Smithfield. The merger would make it unlikely that a 5,000 store chain would double down on localized assortments, seasonality and sustainability trends, such as regenerative organic agriculture and climate-friendly plant-based foods. It would further centralize industrial agriculture supply chains from GMO-fed, concentrated animal feedlot beef, pork, poultry and dairy, as well as chemical-intensive fruit and vegetable monocultures that ensure uniformity of supply and low shrink. Seasonal varieties, smaller and midsize growers and regional manufacturers would hardly benefit unless there was a strategic prerogative. A merger would not enable the supplier base to be more innovative or competitive when a merged company with a tightly managed buying office and a top-down mandate to grow quarterly net income could just focus their negotiations on a small subset of category monopolies to extract maximum revenue. The efforts to grow supplier diversity could also be impacted, as retailers have only just started to prioritized brands owned and founded by diverse entrepreneurs.

There are already 30% fewer grocery stores than a few decades ago and most major metropolitan areas (with the exception of New York City) are heavily concentrated among just a handful of grocery chains. This includes Seattle, Denver/Boulder, Cincinnati, Houston, Dallas/Fort Worth, Salt Lake City, Boston, Washington D.C., Los Angeles and San Francisco, which have heavy market shares in Kroger and/or Albertsons banners. Independent grocers have already testified to Congress about the leverage that such “power buyers’ have in the supply chain, including priority access to inventory, as well as exclusive pack sizes and volume deals. The consolidation in the grocery sector also contributes to price inflation, as retailers have marked up prices above supplier costs increases without fear of being undersold. To date, only a handful of chains have reduced prices, including regional retailers such as HEB, Weis Markets and Market Basket and discounters such as Aldi, that each compete with Kroger and Albertson’s in many markets.

The merger would also impact the wholesale channel, as both companies self-distribute and contract to third party wholesalers. Combined wholesale contracts will put additional cost and delivery pressures on suppliers. And since Kroger and Albertsons also operate their own warehouses in and around cities where they currently compete, the merger will most likely lead to wholesale operations being combined or rationalized, affecting hundreds of blue collar jobs. The omnichannel capabilities of the merged company would also have to be sorted out. Kroger has utilized Ocado for automated fulfillment in many markets and has historically been an early adapter of digital platforms for customer acquisition and retention, while Albertson’s has leveraged omnichannel programs alongside partnerships with UberUBER and GoogleGOOG to drive comparative sales growth. A merger could benefit loyal shoppers with more digital offers and home delivery savings, but it also centralizes the personal information and consumption data of millions of households while creating an additional competitive hurdle for local and independent grocers.

In the New Deal era, Congress passed the Robinson-Patman Act to scrutinize the anti-competitive practices and buying power of larger grocery chains. The breakup of A&P, which at its peak only controlled 12% of the U.S. grocery market, was a result of Robinson Patman antitrust enforcement. But non-enforcement of antitrust as regulators became enamored of consumer sovereignty mythologies in the ensuing decades, alongside race to the bottom pricing and a hand-in-glove fit with chemical intensive, industrial agriculture supply chains and packaged foods production, has enabled an ever more concentrated grocery market, with Walmart owning more than 50% market share in dozens of cities and the Walton heirs dominating billionaire lists. The results have been crystal clear during the Covid-19 era: fragile, just-in-time supply chains that can’t shift with erratic demand and profit-driven price inflation that has led to the highest rates of food at home prices in decades.

Regulators and policy makers should do more than just block the Kroger and Albertsons merger. Nor should the grocery industry be a quarterly ATM for investors. The grocery industry is far too concentrated and suppliers, employees and consumers would all benefit from disaggregating the grocery giants. The goal should be a food industry organized through retail and wholesale cooperatives, independents and a public food sector that operationalizes a right to food. The vital role played by grocers should reflect the diversity, regionalism and fairness that communities deserve and expect.

How Profit Inflation Made Your Groceries So Damn Expensive

The Federal Reserve has been raising interest rates at an unprecedented rate. This attempt to tamp down inflation is geared towards reducing demand and increasing unemployment as the global economy navigates high demand amidst supply chain challenges. And while the Biden Administration has taken some steps to address supply chain pressures and expand infrastructure funding, the Fed has no tools to contain skyrocketing food prices.

When New York poet laureate Willie Perdomo wrote “Where A Nickel Cost A Dime”, he may have been onto something. Food-at-home prices increased 13.1%  since July 2021, the biggest jump since March 1979. Data from Numerator showed a 15.4% YOY increase in grocery prices and data from IRI revealed a 14.4% jump, with producer costs soaring double digits in eggs, flour, butter, crackers, bread, milk, and chicken. 

Root Cause: Labor Costs or Profits?

Robert Kapito, president of asset manager BlackRockBLK, which owns vast swathes of food conglomerate stocks, had a hot take on inflation and the supply chain crisis, “For the first time, this generation is going to go into a store and not be able to get what they want. And we have a very entitled generation that has never had to sacrifice.” What triggered Kapito must be the 47 million people who quit their jobs in 2021, forcing employers to compete for workers by raising wages and improving benefits. This dynamic has raised the ire of Fed Chair Jerome Powell, a former hedge funder, who stated recently that “What you have is 1.7 job openings for every unemployed person. That’s a very, very tight labor market… If you were just moving down the number of job openings so that they were more like 1 to 1, you would have less upward pressure on wages. You would have a lot less of a labor shortage.” 

Yet there is little evidence of labor dynamics causing inflation. Real wage growth for most workers have been declining, despite some modest wage gains in frontline sectors such as retail and hospitality that experienced high rates of illness, death and turnover due to Covid-19. 75% of middle income families have seen their wage growth fall behind inflation and 71% are cutting back on spending. Stimulus money is long gone from households and nearly 60% of it was spent on basics like food and rent. Over 60% of Americans are living paycheck to paycheck and 1 in 10 households are struggling to feed their families, while millions more are buying less meat, produce and alcohol, using more coupons, or trading over to store brands and dollar stores.    

Meanwhile, the average CEO to worker pay ratio was 324 to 1, up 23% from 2019, or nearly twice the rate of inflation. CEO earnings grew 18%, 4 times the rate of wage growth. S&P 500 profits rose by 17.6% in 2021. Profit margins crested at 15.5% in 2022, the most profitable year since 1950, while corporations issued more than $300 billion in stock buybacks to institutional shareholders like Kapito’s BlackRock. The timing with price inflation is uncanny.

Companies have 3 choices when they receive cost increases. They can absorb and take a hit on their margins. They can pass through and share the pain with customers. Or they can put an additional mark-up above and beyond the rate of cost increase, padding their margins at the expense of customers. Up and down the value chain, this profit-driven model is responsible for over 50% of consumer price inflation. And without profit inflation, price increases would be tracking more closely with wage growth.

Oil and Gas:

Despite tight supplies, gas prices are finally coming down from topping $5 a gallon. Major oil companies posted $46 billion in earnings in Q2. 2021 profits exceeded over $75 billion at Shell, ChevronCVX, BP and Exxon, enabling $6.6 billion in stock buybacks as firms bragged that customers “expect and accept” high gas prices.

Freight:

Shipping conglomerates are expected to top last year’s profits by over 73%, or $256 billion. 80% of global merchandise uses the Big 3 shipping alliances whose on-time delivery rates are hovering at an abysmal 40%. And the 5 largest railroad freight lines increased operating margins by over a third in the last 6 years as they cut their workforce by 29%, as part of a shift to lean, just-in-time operating models with fewer and longer trains that cratered on-time delivery rates. A contract dispute with 115,000 railway workers could lead to a massive strike.

Commodities:

Just 4 companies control 70% of the global grain trade and 4 companies control up to 85% of meat and poultry processing. Cargill belongs to both groups. 2021 was Cargill’s most profitable  year ever, with almost $5 billion in net income and up to a 70 basis point increase in margins; meanwhile over 4700 Covid-19 infections and 25 employee deaths occurred at Cargill meat processing facilities the previous year. The other top grain traders, including Archers-Daniels-Midland, BungeBG and Dreyfus also saw record sales growth and profits due to rampant speculation in early 2022. Tyson’s net income  soared 47% to over $3 billion while spending $700 million in shareholder buybacks, while 30,000 Covid-19 infections and 151 deaths occurred at their facilities. JBS passed 17% higher prices onto consumers, and even though volumes decreased, posted a 345% net income increase.

CPG:

After waves of price hikes, CPG conglomerates, such as Coca-ColaKO, Hershey’s, PepsiCoPEP and Mondelez, surpassed earnings estimates with revenues up between 7% and 16%. Coca-Cola attributed price changes to increased net operating revenues. Mondelez increased profits  by $800 million, issued $4 billion in shareholder payouts in 2021, and raised prices again in 2022. Proctor and Gamble increased prices on all of its major segments, including Tide and Bounce, raking in $14.7 billion in net earnings and paying out over $19 billion to shareholders. General Mills increased prices 5 times  in the past year; Q4 profits increased 97% to $823 million, with a 16% jump in FY 2022 profits and over $2 billion in shareholder handouts.

Retail:

The top 10 retailers increased their combined profits by over $10 billion over the past 2 years and issued over $15 billion in shareholder buybacks. Comp sales and profits at the chains responsible for almost 65% of grocery sales, including WalmartWMT, KrogerKR, Costco, TargetTGT, Albertson’s and Ahold, have stayed strong despite recent margin declines, as retailers faced the pressure of passing costs on to consumers while managing erratic consumption patterns. Still, food retailer profits are expect to grow 8% in 2022. Cash-strapped consumers are also driving sales and profits at ubiquitous dollar store chains such as Dollar General and Dollar TreeDLTR.

The Price-Profit Spiral:

An economic analysis by The Roosevelt Institute concluded that shareholders favor conglomerates with large market share because they are able to both raise prices and retain customers: “Firms increased their markups substantially in 2021, both to their highest level and with the largest single-year increase since 1955. Firm profitability, both before and after taxes, also increased to its highest levels… a phenomenon that could be described as a price-profit spiral. The decision-makers in publicly traded firms are sensitive to shareholder pressure to consistently meet short-term earnings expectations and to distribute large proportions of these earnings in share repurchases and dividends. In an inflationary environment, firms that enjoy the discretion and power to adjust markups are more attractive to financial analysts and asset managers.” 

Robyn O’Brien, co-founder of RePlant Capital and author of “The Unhealthy Truth”, recently reminded me that “the executives inside of these companies legally are obligated to meet shareholder return above everything else.” The price-profit spiral is literally Robin Hood in reverse, redistributing the gains from consumer-facing price hikes upwards to shareholders.

Adam Smith, author of The Wealth of Nation recognized this dynamic early on in the development of capitalism. “High profits tend much more to raise the price of work than high wages. Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price. … They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” 

Yet key Republicans Senators, including McConnell, Blunt and Toomey, have dismissed this price-profit spiral. Coincidentally, they are stock owners and donation recipients from companies that have profited from price inflation.

Policy Solutions:

There are policy measures that may ease the pain. The Emergency Price Stabilization Act, introduced by Congressman Jamaal Bowman (D-N.Y.), would tackle supply side price hikes and recommend the use of price controls to limit price increases in key goods and services. Price controls during WW2 kept profits in check while strengthening consumer spending power. Windfall profit taxes and expanded unionization could redistribute the gains more equitably. The USDA has rolled out compelling programs to develop regionally distributed food supply chains. The FTC has stepped up antitrust scrutiny, alongside Congressional hearings investigating grocery consolidation. And worker representation on corporate boards could bring some balance to corporate governance above and beyond timid ESG measures.

Despite monetary policy having no sway over food prices, the Federal Reserve’s interest rate hikes may plunge the economy into a growth recession, punishing working people who carried the nation through the pandemic. What we need instead is to rein in the corporate capitalism strip-mining a food system in crisis.

Why Do Amazon Workers In New York City Want To Unionize?

Amazon workers in Staten Island have gathered enough signatures to petition the NLRB to form a union at the E-commerce behemoth. We spoke to organizer Chris Smalls, a former Amazon supervisor and a co-founder of Amazon Labor Union.

Note: This interview has been lightly edited for length and clarity.

Errol Schweizer: Can you give us a quick summary about how you got started working at Amazon and what led to your dismissal? 

Chris Smalls: I started working at Amazon back in 2015. I came in entry level, worked hard, got promoted up to a supervisor level. My first year, I opened up two more buildings after that first facility, one in Connecticut. And then my last facility was JFK Staten Island, currently where I'm at right now. So I was a supervisor for four and a half years. I oversaw the outbound operation. And last year when the virus hit, Amazon failed to protect us, provide PPE, provide any safety measures, guidelines. And as a supervisor, I felt it was my responsibility to protect my fellow co-workers who I spend 40 to 60 hours a week with, and I consider my extended family. And when I had a meeting with my higher ups, my bosses, they told me not to tell the employees that I'm overseeing that somebody tested positive. And that's when I took my stance against the company. I held the walkout on March 30, 2020. And two hours after that walkout I was terminated. And from that moment, I pretty much was catapulted into the media spotlight. 

The week after I got terminated Jeff Bezos, along with the general counsel himself, signed off on a smear campaign, calling me not smart, not articulate, which ironically made me the face of the whole unionizing effort against Amazon. And fast forward to Alabama/Bessemer, what happened several months ago. That's exactly what we're trying to do. We're trying to pick up where they left off, and hopefully become successful in Staten Island. So we began the campaign about six months ago. And currently, that's where we’re at. We're in the middle of a heated campaign against Amazon as we speak. And I'm just trying to lead these workers into a victory.

Errol: Tell us a bit about how the RWDSU Bessemer campaign influenced this work.

Chris: Yeah, they definitely laid down the blueprint of how to get it done. I drove 16 hours down there with some of my colleagues who are actually current Amazon workers. And we spent some time on the ground. And we saw a lot of missed opportunities. And when we came back to Staten Island, we decided to say, no, we're going to wait for the results. After the results, then we're going to figure out how we're going to go. And that's exactly what we did. After the results came out, we knew that we wanted to strike while the iron was hot. And that's exactly what we're doing now. We didn't waste any time. We jumped right into our campaign. And we're organizing differently, organizing from within. 

Errol: What is your critique of Amazon and how they treat employees?

Chris: Amazon treats workers like numbers. They run completely off of metrics. Everything is calculated from the moment you clock in and clock out. And that's what we try to express to the workers that we're trying to organize. You get a station number you're at 10, 11, 12 hours a day. You get a 30 minute lunch, which is obviously not enough time to walk across these massive buildings which are a million square feet and you're on your feet all day. Your body hurts, your body aches. You're doing repetitive work. So you're hurting the same limbs every day, straining the same limbs every day. You're bending, you're reaching, you're pulling, and these are real people that are being hurt and affected. That's what we try to explain and express to the public as well, they don't see behind the scenes, how their packages are being delivered.

Errol: What is the Amazon Labor Union? How did it come about? And what are the goals and vision of this new organization?

Chris: So, the Amazon Labor Union is a completely worker-led independent union, brand new from scratch, created by current Amazon workers. Here in Staten Island, we have four buildings. So this is going to be a very powerful union once we get established. These workers are resilient, they are brave, they're organizing themselves and the Amazon Labor Union can't be a better organization when it comes to organizing against Amazon, because they know the ins and outs of the company. The lead organizers here, including myself, we've been a part of Amazon for five plus years. Some of them worked for Amazon almost seven years or more. And so we're trying to hopefully spread like wildfire, once we're successful here.

Errol: So what are some of the tactics you're using for recruiting folks? 

Chris: It's just the conversations, the face to face conversations. And as far as the workers that are organizing, these face to face interactions with their co-workers are the best way. We do use social media, obviously. But we do several things. We held 5 going on 6 barbecues, we had our press conferences, we invite musical guests, and we feed the workers daily and give out waters, donuts, coffee, you name it, we give it out every single day. Those types of connections really resonate with the workers. Amazon doesn't do any of these things, only as a reaction to what we're doing. They took away all their food vendors. So we've been giving out free food. They took away their hazard pay. They got workers that are living in shelters, some of them even homeless, and we're raising money for these workers. We're trying to amplify their stories. And we also obviously filed several lawsuits since we started. We have several unfair labor practice lawsuits pending right now with the NLRB. So we're just organizing differently with these tactics, and I think this is very effective going up against Amazon. Small victories matter. You have to earn the trust with the workers and you’ve got to put in the work on the ground.

Errol: How has Amazon reacted to your on the ground organizing efforts in Staten Island?

Chris: Oh, wow. They, well, they built this prison fence up to stop us from connecting with workers. They call the police on us, they call the fire department on us. They put the signs in the bathrooms, like they did in Bessemer. They send out text messages, they send out emails. They have the same union busting firm, walking around the building, spreading rhetoric, spreading lies, spreading doubt. We've seen it all. I mean, they didn't hesitate with us. They started probably the first or second week. They didn't wait six or seven months into our campaign, which tells us that we're a real threat. 

Errol: So these are some of the same tactics they used in Bessemer. And does it worry you that those tactics were very effective in stopping the Bessemer campaign?

Chris: The way they were union busting in Alabama, with the intimidation factor, they had police at every single interest entrance of the facility. Every single day. They gave out what we call Amazon swag, like “vote no” pins and shirts, stickers, they gave out incentive money, they paid workers to quit before the vote, we're expecting the same thing. But here in New York is a different energy. New York is a union town already. A lot of these workers are related to union members, whether it's their parents or grandparents, they get off the bus, the MTA is unionized. Even the police department is unionized, the Fire Department is unionized. So everything that Amazon is trying to do with us it's not working, it's actually backfiring. Because they're going so hard with the union busting that workers are realizing is probably something that they need.

Errol: What are some of the positives that workers hope to have by being a member of a union?

Chris: Well, the number one thing is salary. A unionized worker makes roughly eleven to twelve thousand dollars more than non-unionized workers. Every unionized worker that I know, every unionized worker here in New York, they make very good money. They have a pension, they have job security. They have representation. They have Medicare, Medicaid, paid medical leave, you name it, the sky's the limit when you're in the Union. And when it comes to non-unionized workers, you know, companies can hire us and fire us at will. And that's what we tell workers that start here, that just got hired, this company can walk you out the next day for no reason. And that's what we have to stop. We have to break down that system and form something that's going to protect us. 

Errol: How can folks support your work?

Chris: This is a very grassroots campaign. We have a GoFundMe up, on Twitter at Amazon labor union, or our website. Please donate to our GoFundMe. Every penny comes in and out right towards unionizing Amazon. So be a part of history.

We're in the very beginning stages of our fight. We need as much as support on the inside of the warehouses. We need that on the community level as well. So please support us in any aspect.

Why Did Kellogg’s Workers Go On Strike?

Kevin Bradshaw is Vice President of BCTGM Local 252G in Memphis, Tennessee.

Dan Osborn is President of BCTGM Local 50G in Omaha, Nebraska.

Note: This interview has been edited for length and clarity.

Errol Schweizer: What is your role at Kellogg's?

Kevin Bradshaw: As an employee, I work in the warehouse, making the product and shipping it all over the world. I've been doing it for about twenty years. I'm the vice president of the local here. 

Dan Osborn: My job at Local 50G is I'm president. Normally my role is the business end of the local union. Recently it's been to organize the strike that's going on right now, as well as talk to the media and get our message out. At Kellogg's, I'm a mechanic. I've been a mechanic for eighteen years. My attendance rate is 99% as a dedicated employee.

Errol: What are the issues here?

Kevin: The issue here is all about the future of the working person in America. Here at Kellogg’s it's about reducing the hourly wage rate. It's about cutting benefits, pension, retirement and health care that's essential for any working person in America and working person in the world.

We went into an impasse last year, about benefits and wages and insurance that were supposedly unsustainable for the company. And we pushed back because we wanted to work with the company in good faith. But the things that they're asking for are just outrageous. I mean, they're ridiculous. Taking someone's pay and cutting it by $13 an hour. There's no way to actually ever maximize pay, no way to retire with insurance or health care or pension plans. And to just work every day, seven days a week, twelve, sixteen hours a day, and never have anything to show for it at the end of your career.

Dan: Our CEO, from 2020 to 2021, has taken a twenty percent increase in his compensation, as well as the top executives, they've been taking increases. So this contract that expired on October 4th, we are currently on a two tier wage system. Thirty percent of employees are on a lower tier making eleven, twelve dollars an hour less, higher insurance premium, less vacation, lower vacation pay. So we're all about the equalization of wages, we want to bring those thirty percent up to the higher tier level of workers. The company's proposal was to eliminate that thirty percent cap and eventually get everybody on that lower tier while the company is making record profits.

Errol: How has the Covid-19 pandemic impacted working conditions?

Dan: 2020 is actually when this contract expired the first time. We worked under an extension of that same contract for a year up until October 2021. In 2019, Kellogg's Omaha did not hire any employees. They then shortened our numbers. In my business, we run a twenty four hour cycle, seven days a week, 365 days. There's a couple days where we shut down to fumigate for bugs, things like that. But normally we're running full production all the time. So when you do not have enough employees, that has to be covered by employees who are at work in the form of forced overtime. That's twelve hours a day. I work a 7:00 to 3:00 shift. So they come up to me at 2:59 and tell me I got to work till 7:00 P.M. Then come up to me at 6:59 and tell me I got to be back in at 3:00 A.M. to cover vacancies. And so everybody in the plant was already working a lot of overtime and then the pandemic hit. And at one point, we had close to one hundred people out either with COVID-19 or from COVID-19 protocols. And so that only increased the overtime that we were working and we did not shut the plant down. We continued providing cereal to the nation. And we did so tirelessly. We worked and worked and worked and Kellogg's continued to make record profits through the pandemic. So you know, we are not asking for wage increases. We're not asking for better benefits.

Errol: What's at stake?

Kevin: What we're standing for is for Kellogg's to continue to be fair to employees because of the work we do and the money that we make them. And we just want to keep things the way they are, to be able to pay people what they deserve the paid. Because what they're asking for is just ludicrous. We just want to be able to protect the future worker. “Well, if you guys accept this, they won't have anything to do with you, but everybody coming behind you, now you no longer have healthcare benefits. But you still can come work here for 13 dollars an hour less than what we make.” So why would people want to be in a union that sold them out for something as crazy as this? So we're fighting for the working class, we're fighting for families, we're fighting for loved ones, we’re fighting for America. Your fight is our fight.

Dan: They said they are prepared to move these production facilities down to Mexico. The main thing that would cost Kellogg's money is equalization of wages within our ranks. Kellogg's came out in the media and stated that our proposals would cost the company $60 million. In 2020, during the negotiations, before we started the extension, there was a Kellogg's executive who stated in negotiations that he's willing to spend $10 million a day to keep us out on the street. And to get rid of our union essentially. Well, if he's willing to spend $10 million a day, I'm not a mathematician, but that's six days out on the street.

And that that doesn't make any sense to me. That's who we're dealing with right now. And it's frustrating at a time, where it's hard to find employees, at a time where they're making profits. It doesn't make any sense and I can't wrap my head around the timing. I keep coming back to the same thing and its corporate greed. I know that's a slogan that gets thrown around a lot. But this is what it is.

Errol: So should folks skip the Frosted Flakes? 

Kevin: Oh, yeah. I mean, they got to go. Leave the cereal in the store. We make the lowest cost of cereal in the United States right here in Memphis, Tennessee, along with my three other sister plants in Omaha, Nebraska, Lancaster, Pennsylvania and Battle Creek, Michigan. They talked about the $120,000 that we made a year but they didn't tell anyone that comes from mandatory daily overtime, fifteen hours a day, seven days a week non-stop. So we're fighting for our families, and we're here to stay. One day longer, one day stronger, and they’re threatening to bring scabs to replace us. We know during a lockout from 2013 they spent over almost $50 million in ten months to try to save $8 million with scabs. And we had scabs working in the plant that actually got tried and convicted and are in jail right now for urinating on the cereal belts. No one wants to eat “rice pispies”. You know what I mean? We want to eat Rice Krispies.

Errol: How can folks support you?

Kevin: You can support us by going to the Union page and you'll get all the links that you need. I just want to say we appreciate all the support in Memphis, from the religious community, the Memphis Police Department, the Fire Department. We have people on the line right now like Dr. Earl Fisher, who's a pastor here in the city of Memphis. We have a lot of support from a lot of different organizations.

Dan: Go online and do a quick Google search and figure out what brands Kellogg's has. I mean they're a giant corporation and do your part and boycott it. Kellogg's isn't the only game in town. When you're at the store all you have to do is make a conscious decision to put that box of Apple Jacks back and grab one of the others.

The second item would be to go to our website and donate through PayPalPYPL, 5 bucks, 10 bucks. We have people battling cancer out on these picket lines right now. We have people whose families we have autistic children that need medical attention. So that that that would definitely help ease some of our struggles that we're dealing with.

Why Are Starbucks Workers Unionizing?

Starbucks employees at three Buffalo, New York area locations of the coffee shop giant have petitioned the NLRB to unionize. We spoke with two union supporters and members of StarbucksSBUX Workers United, Michael Sanabria and Casey Moore. Michael is a photographer and an award winning barista who has been with Starbucks for over four years and had previously worked at other local coffee shops. Casey is a Starbucks barista, graduate student and graphic designer.

Note: This interview has been edited for length and clarity.

Errol Schweizer: Why did you start working at Starbucks?

Casey Moore: I'm a barista at Starbucks and I started working there because I'm studying for graduate school. I needed things like health care benefits. I thought they were really good compared to a lot of other service industry jobs in particular. I had worked in the service industry before, I've been a waitress and different things. And I really valued the things what Starbucks seems to stand for. So I was really excited when I got a job as barista. And even more excited when I started hearing things about organizing.

Michael Sanabria: I'm a barista, I actually got hired into the company as a shift supervisor. I had worked at another coffee chain and my store manager came to Starbucks, and she loved me and also wanted me to work at her store. And then I kind of fell in love with coffee, and then the people and the vibe.

Errol: What's it been like to work at Starbucks during the pandemic?

Casey: It's definitely heightened tensions with people. There's been supply shortages around the country affecting Starbucks, so we're constantly out of things. You show up to work and you don't really know what you're going to be working with, if you're really going to be able to do your job because of the supplies that we have and don't have. There's been some COVID precautions taken and I will say that, I think Starbucks as a company did a good job especially during the beginning of COVID, with closing down some of the stores, and things like that, but it's definitely been a very stressful environment. I think the pandemic highlighted how hard service industry jobs are, and highlighted the importance of us getting better living standards.

Errol: So what inspired the union organizing campaign?

Michael: I think what inspired it is seeing just the way the company had treated the employees early on, there was actually an increased pay rate when we were essential workers, and then after all the stores started being required to open up again, they took that pay rate down. But we're still in the pandemic, nothing changed. So things like that, and just generally not feeling appreciated. 

Casey: I think my store in particular is interesting, I work at the Williamsville Place Store in Buffalo. And my story is actually kind of an outlier. Because most of the partners at my store have been there 3, 5, 10 plus years. So, I came in as a new partner and really saw that these are the people that make Starbucks work and make it happen. Without them,  our store would be a mess and they have good ideas. And like Michael said, we just didn't feel appreciated or valued. Or, ultimately, it's about having a voice at the table. And I think that's what really brought this on was people saying, you know, we can do something about this, we have power when we stand together, and you know, there's 8000 Starbucks in the entire country, and not one of them are unionized, there's a problem here. I think just people talking in the Buffalo region, and a lot of people wanting to do something about it, I think it was a good moment. And the word spread. And here we are.

Errol: So what are your demands? 

Casey: The demands are going to depend on different stores and what the bargaining committee at each store comes up with. That is ultimately the reason that we want a seat at the table, to decide democratically what we want those changes to be. There are things like seniority pay, for example, adequate staffing, credit card tips, like all of these things. But, you know, corporate has come in and changed everything about our stores and is trying to fix long standing problems. But from our perspective, we know that they're only here because of the union effort. And we know that the second the vote is over, they're gonna pack up their bags and leave. So I think it's really about having a seat at the table and making Starbucks a better company now and also 5, 10 years down the line.

Michael: A voice in some of the decisions. They've come in and arbitrarily decided certain local managers and certain members of local management are unfit and just fired them. We didn't ask for that. That wasn't something we wanted at all. They just kind of did it. They said that they were here to listen, and you're not listening if you're just arbitrarily deciding this. We want to be able to hold them accountable to that. I know at one store meeting they even said, you know, hold us accountable. And somebody at my store was like, well, how do we do that? What are the avenues to do that? And they just didn't have an answer, 

Errol: So how has this campaign been received by your co-workers?

Michael: Most of them have been in favor, right now we're in kind of a period of high turnover. So there's been a lot of newer people. I had one coworker a couple weeks ago telling me this is the best job she's had so far. It doesn't mean it can't be better. But they've been genuinely positive. 

Casey: I'll be honest, it's a mixed bag. There are people that are pro, there are people that are anti, I'm sure. I think there's been in general a lot of excitement. But to be honest, there's also been a lot of confusion. And I would say that's largely because of Starbucks' response, since they started having these basically mandatory listening sessions and team meetings. We've asked them straight up, can we have a union representative? We only have one organizer helping us. Can he stand here? Can you let us answer questions, too? And they keep saying “Oh, well, you know, the union could have their own meetings if they want to”. But as an example, I brought in some fliers explaining what was going on in my store and put them in the back room where we have all the other information that partners need to know. And I come back a day or two later, and they've all just disappeared after a group of corporate representatives were visiting our store. And when I inquired about them, no one knew what mysteriously happened to them. So, if Starbucks wants to have a fair election, like they keep saying that they do, then they need to actually let people know what's going on and give us equal time.

Errol: So what's the overall vision for organizing?

Michael: Better quality of life at work. I have seen my coworkers have breakdowns over things like being behind on bills or even things like being understaffed on the floor. Like really, really poorly understaffed. Somebody who recently got promoted to shift supervisor texted me in the middle of a really awful shift. And she was like, I really, really want to cry right now, But I don't have the time for it. Stuff like that. It is a fun job. Like it's a coffee shop, right? And it's not the most serious thing in the world, but it's just coffee. So you can have fun with it and people shouldn't be having breakdowns. And ways you can do that are things that we can all collectively bargain for and get in an agreement.

Casey: It's going to be a battle to get a good contract, but we're ready for that. The vision for me is to get a good contract and fight for all the things Michael was saying and to actually have our voices be represented and actually have a seat at the table for partners. I want my quality of life to be better, my co-workers quality of life to be better and I think we can get that with a good contract. And I think it'll make Starbucks a better company at the end of the day.

Errol: How can folks support you?

Michael: Following us on social media on every platform, Facebook, Instagram Twitter.

Casey: I think we need to call on Starbucks and say this is supposedly a progressive company, these are things that you value, but you can't be pro-LGBTQ, pro-Black Lives Matter, pro all of these things and be anti-union. It just doesn't work that way. So I think we just need help in calling this out for what it is. And tip your baristas when you go.

Errol: You getting community support in Buffalo?

Michael: Yes, there was somebody in the drive thru and he was like, you know you guys were on the news and I was like yeah, I do and he was like great, keep it up, we hope it goes well and we hope the company stops doing bad stuff. There are regulars saying if anything negative comes back on us, somebody gets fired or anything like that, they'll stop coming completely and these are people that come 3, 4, 5 times a day, 5, 6 days a week.

Casey: In Buffalo we're a strong union town up here. We have the Mercy Hospital workers on strike right now, we were out there picketing with them. We have India Walton, a socialist mayoral candidate who won the Democratic nomination, about to be our future Mayor. We have so much support and we're gonna be proud to join their ranks.

Some folks, when they hear that we're organizing their first response would be, why are those Starbucks baristas organizing? You know compared to other jobs like McDonald'sMCD and stuff like that, they have healthcare? Why are they doing this? What is the necessity? I would just say to them, I've worked so many service jobs but this is the hardest by far. There's so much going on, we're working our butts off and, our quality of life, we're barely just making it. So we're fighting not only to improve the lives of baristas, but hopefully the service industry. And we deserve to have a say in our workplace just like everybody does. 

Michaels: I've even had family members ask, isn't Starbucks great to work for? And yes, but also no. My mom works in the hospital, and she was a barista for three months, and she was like, you guys work way harder than I do. She has tons of downtime at work. And she was like, you guys work hard. It's not an easy job.

Errol: I learned this the hard way at Whole FoodsWFM that we had a lot of really progressive policies, but the company changed, did layoffs and took away a lot of that stuff because none of it was legally guaranteed. It was just their preference to give us those things. You need something in writing, if you want to keep what you already have. And if you want to get more, you definitely need it legally binding. Thank you both.

Why AB257 Could Be Life Changing For California’s Fast Food Workers

Born in California, fast food is a truly American institution. It suits working peoples’ hectic schedules and is a cultural and dietary fixture thanks to decades of advertising. Yet many of the costs of fast food are externalized, such as the climate footprint of animal agriculture, the health consequences of frequent consumption and the low wages and tough working conditions faced by grill cooks and cashiers. 

Supporters of AB257, California’s FAST Recovery Act, hope to address that issue of worker exploitation through groundbreaking new legislation. The FAST Act would establish a council of fast food employees, worker advocates, franchisors, franchisees and public officials that would set wages and workplace standards for the industry and protect workers from retaliation. AB257 has already been approved by both houses of the California State Legislature and on Labor Day, Monday September 5th, 2022, was signed into law by Governor Gavin Newsom, stating "Today's action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry."

Over 500,000 California workers across more than 30,000 worksites would benefit from the law. California’s current minimum wage is $15 and is set to increase by 50 cents on Jan. 1. The FAST Act council would start setting hourly wages at $22 an hour and increase in sync with the consumer price index, or up to 3.5% a year. The bill covers fast food chains with 100 or more locations nationally. Worker advocacy groups such as the California AFL-CIO and Fight For $15 have been organizing on such issues for years and in June 2022, workers at over 300 fast food restaurants walked out to show support for the legislation.

AB257 has drawn stiff opposition from fast food companies. “It’s this solution in search of a problem that doesn’t exist,” said Matt Haller, chief executive of the International Franchise Association, which represents some 1,200 franchise brands such as McDonald’s, Wendy’s, and Papa John’s.

Chipotle, Yum Brands, Chick-fil-A Inc., In-N-Out Burgers, Jack In The Box and Burger King have spent more than $1 million to lobby lawmakers against the bill and the International Franchise Association has spent $615,000. And Inspire Brands recently bragged "We were successful in our advocacy efforts to remove the Raise the Wage Act, which would have increased the federal minimum wage to $15 and eliminated the tip credit” in a 2021 letter sent to frachisees regarding the defeated national living wage legislation. Meanwhile, the company has among the highest number of employees relying on food stamps. McDonald’s is likewise ranked  among the top 5 employers with workers relying on SNAP assistance. On the other hand, the CEO of McDonald’s took home $20 million in compensation in 2021. The company approved over $3.4 billion in share buybacks  to investors since March 2020, an average of $865 million in buybacks per quarter over the last 5 years that could have instead been invested in higher wages and job training. 

The industry may also be concerned that the FAST Act will have implications beyond California. The state accounts for 14% of U.S. restaurant sales and is the birthplace of modern fast food culture, as Eric Schlosser documented in Fast Food Nation.

But slinging fast food it is not an easy job. Fast food cooks had the highest Covid-19 mortality rates, particularly among Latinx workers. Over 87% of fast food workers are injured on the job at least once a year and 90% report having been forced to work off the clock, denied breaks or refused overtime pay. At least 12% have been assaulted on the job and a 2016 survey documented that 40% of women in the sector experienced sexual harassment. 85% of California fast food workers have experienced wage theft, with one Fight For $15 activist personally documenting over $150,000 in stolen wages over the past decade. And in what amounts to massive subsidies to fast food company shareholders, two thirds of California fast food workers were either on public assistance or had a family member who was, with nearly 1 in 3 on SNAP due to food insecurity, amounting to $4 Billion in statewide expenditures and $1.2 Billion in Los Angeles County alone.

According to a 2021 survey, over 80% of workers  at McDonald’s, Wendy’s, Burger King, Arby’s, Sonic and Taco Bell earned below $15 an hour, averaging under $26,000 a year. To put this in context, the individual living wage in California, prior to the current inflationary era, was at least $19.41 or $40,371 a year. To afford a modest 2 bedroom apartment in California, you would need to earn at least $39.01 an hour. Nearly 7 in 10 fast food workers in Los Angeles are women and 90% are people of color, a stark example of racial capitalism. 

And while fast food wages have recently crept up as employers attempt to attract workers back to service jobs, over half of inflationary pressures can be linked back to corporate profits, not higher wages. Wall Street has experienced its highest profits in almost 75 years, particularly in highly consolidated industries such as oil and gas, container shipping, meat and poultry, commodity grains, as well as consumer packaged goods and grocery retail as conglomerates raised consumer prices above and beyond their rates of cost increases. Meanwhile, the labor share of the national income has declined, worker raises are not keeping pace with profit-driven price inflation and bankers are betting that the Fed’s interest rate hikes will “help push up the unemployment rate”. This is par for the course: if wages had kept up with American workers’ enormous productivity since 1975, the minimum wage would be $21.50 an hour. If the minimum wage had kept up with Wall Street bonuses, it would be $44 an hour. 

Or as the late Barbara Ehrenreich put it in Nickel and Dimed, “We can hardly pride ourselves on being the world’s preeminent democracy, after all, if the large numbers of citizens spend half their waking hours in what amounts, in plain terms, to a dictatorship.” 

It is no wonder then that over 70% of Americans support unions, the highest level since 1965. There has been vocal public support for high profile union campaigns at AmazonAMZN, StarbuckSBUXs, ApplAAPLe and Trader Joe’s. But what AB257 also does is add another tool in the toolbox for workers and living wage advocates: sectoral bargaining.

Sectoral bargaining is when workers bargain with multiple employers in order to set standards across an industry, not just at the enterprise level. This is especially important considering the gaps in U.S. labor law that allow employers to coerce and manipulate employees during union campaigns, fire organizers and even close facilities. Sectoral bargaining enables the benefits of unionization to be shared by all workers in the sector, such as well-documented higher wages, better benefits, better and safer working conditions, protection from retaliation, and elimination of gender and racial pay gaps.  

Sectoral bargaining is even more important for workers in fissured industries such as franchises, or the sectors that are not covered by labor law, such as independent contractors, agriculture workers and domestic workers who are majority women, people of color and immigrant. Sectoral bargaining also prevents a race to the bottom, where unionized workplaces have to compete with non-union shops with lower wages, leveling the playing field for owners and management as well as workers. 

And sectoral bargaining is quite widespread around the world, from Argentina and South Africa to Germany and Norway. There is historic precedence in the U.S., such as the wage boards of the pre-WW1 Progressive Era, as well as various initiatives during the New Deal, including the National Industrial Recovery Act. And even in the present day, deep in the heart of Houston, Texas’ Harris County, an “Essential Workers Board” has been created to give workers a voice in issues that affect them on the job.

It is no wonder then that the fast food industry is up in arms over AB257. When you have had the privilege of unilateral decision making and profit-taking for so long, steps towards equality surely feel like oppression. Then again, if your business is dependent on poverty wages to survive, maybe it’s time for a new business model.

As Barbara Ehrenreich wrote in Nickel and Dimed, “When someone works for less pay than she can live on — when, for example, she goes hungry so that you can eat more cheaply and conveniently — then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The 'working poor,' as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high. To be a member of the working poor is to be an anonymous donor, a nameless benefactor, to everyone else.” 

AB257 is a positive move towards normalizing living wages, dignity and worker power in a hugely popular and profitable industry, and one good step towards paying down society’s debt to fast food workers.

Why Trader Joe’s Workers Are Unionizing

A Trader Joe’s store in Hadley, Massachusetts made history on July 28th, 2022, when it became the first store in the chain’s history to unionize. Workers approved the union in a 45-31 vote.

In a statement to the press, a Trader Joe’s spokesperson said, "We are prepared to immediately begin discussions with union representatives for the employees at this store to negotiate a contract. We are willing to use any current union contract for a multi-state grocery company with stores in the area, selected by the union representatives, as a template to negotiate a new structure for the employees in this store; including pay, retirement, healthcare, and working conditions such as scheduling and job flexibility."

In reaction to the affirmative union vote, Congressman Jim McGovern (D-MA) tweeted, "Congratulations to everyone who made this possible— you are an inspiration!" The store is among the latest retail and foodservice operations to become unionized.

Maeg Yosef is a longtime Trader Joe’s crewmember and a co-founder of Trader Joe’s United.

Errol Schweizer: What do you like about working at Trader Joe’s? 

Trader Joe's United: What I like most about working there from when I started up until now is the people that I work with. I work with energetic, fun, intelligent, friendly and caring people. 

Errol Schweizer: I can totally relate to that. It's probably the main reason why I worked at Whole Foods for so many years. I came in thinking I needed a temporary job and next thing you know, I made all these friends and connections.

So what was it like to work at Trader Joe's during the COVID 19 pandemic? 

Trader Joe's United: At the beginning of the pandemic, it was pretty much like working in a mosh pit. At that time, the company offered workers an unpaid leave. And so I had a young child whose school had just shut down. We were doing remote learning and I was like, I'm taking that leave and I'm going to stay home and protect my kid and help him do remote school. And so that was my focus for most of that time. You know, for the crew that did continue to work during the pandemic, everyone had their own personal reaction to it. But from the people that I spoke with, it was definitely a stressful time. It was hard mentally. It was hard to feel at risk physically. But I personally can't speak to that the way that other people would be able to. 

Errol Schweizer: What was it like serving the customers?

Trader Joe's United: The experience was really intense. The first couple of weeks of the pandemic, no one knew what was happening. And so it was literally like wall to wall people. We were taking in the biggest loads that we had ever taken in. There was definitely a lot of fear. People are afraid that they wouldn't get what they needed, it was very chaotic. Overall, I would say that our customers were okay. We have great customers and they have a great community there. There's always outliers that are hard to deal with. But on the whole, I would say that our customers have been great. 

Errol Schweizer: Trader Joe's is really well known for a cool and unique assortment. It's a very different product set than most grocery stores. How were the out of stocks and what was able to come in? 

Trader Joe's United: There have definitely been supply chain issues. We had a lot of things that got stuck in port. We've had to set limits on how much we can order based on the trucks that are available. So that piece has definitely been a challenge, but at the same time, there's still always food on the shelf. There's a lot of choices. So I feel like part of that is also that people are so used to getting a world where you get everything that you want all the time, and we're just not in that world anymore. So there's still food. It's just not always what exactly you want all the time. 

Errol Schweizer: So how did management handle some of these challenges? 

Trader Joe's United: You know, I think that they have done the best that they could do in such a challenging time. And I feel like it's stressful for everybody, including management. So they're also just following what the company is dictating. And we're following community mandates. So if there's a mask mandate in town, then we follow that. But if it drops away, then the store itself will not have an independent mask mandate. So we're definitely taking cues from corporate as well as what's happening legally at the local level. 

Errol Schweizer: Why did Trader Joe's workers start organizing? 

Trader Joe's United: We started organizing in response to working through the pandemic. There was a feeling of being underappreciated, undervalued during the pandemic. There's also some changes that happened with the company, starting around ten years ago, changes to our health care plan, changes to our retirement, and then most recently, our guaranteed retirement was done away with entirely. So we used to have a guaranteed contribution equal to 15% of our annual earnings, which is how things were when I started 18 years ago, but around several years ago, that dropped to 10%. And then quietly last summer the policy was changed so that we might receive a discretionary contribution. But there's no longer any guaranteed retirement contribution whatsoever, according to our handbook. And so for those who are veteran crew people who are seeing retirement age on the horizon, who have been trying to plan for that, that was really tough to take. 

I discovered in December of 2021 that Covid-leave had been available through the state of Massachusetts for people who got sick. But the crew at our store, we did not find out about that until seven months in. So it was like seven months of people thinking that they had no recourse to get paid if they got COVID, especially, if we are exposed to it all day at work. And so that was really upsetting to know that people are struggling, do I go to work today and get paid but maybe risk getting someone else sick or do I stay home and not get paid? So it was a cumulative effect of all of those things. Over time, we felt that there was a clear direction that the company was going in with our pay and benefits, and we wanted to do something about it. And the only way to really have a say in your workplace and to negotiate with your employer is to form a union. So that's what we started to do. 

Errol Schweizer: What are some of the goals and objectives of Trader Joe's United? 

Trader Joe's United: Well, negotiating is a democratic process. So the specific assets that we would bring to the table will be decided later through surveying the crew and having discussions. But the big buckets are benefits, like retirement, our pay, which is not keeping up with inflation at all, and safety issues, both pandemic related safety issues and on the job day to day. So those are all things that we hope to look at and improve on. 

Errol Schweizer: How has Trader Joe's management responded to these efforts? 

Trader Joe's United: Well, when we first went public, a small group of us went to our manager and we were like, we want to give you the courtesy of telling you this in person, we're going to form a union. And his response was to give us a letter that promised not to delay the election and that they welcomed a fair vote. Since then, we have not found management or corporate to be very welcoming to the idea of a union. There's been quite a bit of union busting activity happening, which is fine. We expected it. We did not think that this was going to be an easy path and we were prepared for those things to happen. So one of the things that happened was that we created union buttons. We tried wearing them to work. At first, people were told that they needed to take them off or go home. Then people were told that wearing the button could affect your review in a negative way. Then people were told that there might be disciplinary consequences, but we have no idea what those may be, which in a way is even more threatening because you're like, Am I going to get fired if I keep wearing it? Like, what will happen? So at this point, we have decided to comply. And meanwhile we have filed unfair labor practices with the National Labor Relations Board. But we know that our right to wear a union button is protected by the NLRB. So we just hope that that gets resolved soon. But, we know that companies like to union bust and so we had prepared ourselves for that. 

Errol Schweizer: So what does this feel like then when you're at work? 

Trader Joe's United: It's definitely uncomfortable. Some of it has gotten personal, which is a distraction, like my personal life or my schedule or medical history. Those things have all come under scrutiny. And that's bizarre to me because it's truly irrelevant to whether or not a union will benefit us as a crew. And so I feel like those are distractions. Will a union benefit us as crew members? That's an easy answer. It will give us a say in our workplace, it's the only thing that mandates that the company listen to us and work with us on building a contract together. So I'm a big fan of RuPaul's Drag Race, and there is a drag queen whose motto is “just like water off a duck's back”. And so that is what I'm channeling. 

Errol Schweizer: How has the community in Hadley responded?

Trader Joe's United: Customers are thrilled. They are very excited. They want to know how to help. The best thing a customer can do is just come in and say, “We would be so excited to shop in a unionized Trader Joe's”. 

Errol Schweizer: How can readers support Trader Joe's United? 

Trader Joe's United: Give us encouragement and just go in the stores and tell the crew that you're excited to see a unionized Trader Joe's. That really lifts our spirits when people come in and tell us that.