Big food is getting bigger

For shoppers, it might seem like choices galore at the store, but most of our favorite brands are actually owned by a handful of food giants, including Kraft Heinz, General Mills, Conagra, Unilever and Delmonte.

Kraft Heinz, the result of a $63bn mega-merger in 2015, which was backed by Warren Buffett and a Brazilian private equity firm, appears 12 times in the top 4 firms for groceries, with products ranging from bacon, sour cream and coffee to frozen meat substitutes and fruit juice.

The big firms are helped by so-called category captains who represent leading brands or manufacturers and work with major retailers to decide which products get prominent spots on our supermarket shelves. And then there’s the slotting fees – payments by big-brand manufacturers for eye-catching product placement. This makes it very hard for new independent brands to get a break. And when they do get a tiny foothold, it often doesn’t last.

A man in a Los Angeles Whole Foods shopping for tortillas. Photograph: Patrick T. Fallon/Bloomberg via Getty Images

For example, while hipsters and old-school beer enthusiasts have contributed to a boom in local craft beers, the Belgian company Anheuser-Busch InBev acquired 17 formerly independent craft breweries between 2011 and 2020. It might not be clear to consumers from the labels, but the company owns more than 600 brands, including the mainstream favorites Budweiser, Michelob and Beck’s.

Another source of confusion is private labels – supermarkets’ own brands, of which little is known about the producer – which appeared in the top four of 77% of the groceries we looked at. For frozen fruits like the mixed berries used for smoothies and desserts, private labels account for 66% of the market share, as well as 56% of refrigerated whole milk and 54% of eggs sales.

Millions spent on lobbying politicians

The economic power of the corporations has contributed to their growing political power, which in turn has led to laws that put profits before food and worker safety, consumer rights and sustainability.

During the 2020 election cycle, the food industry spent $175m on political contributions, including lobbying by PACs and individuals and other efforts.

The money came from every part of the food chain, including dairy, eggs, poultry, meat processing, farm bureaus, sugar cane, crop production and supermarkets.

About two-thirds went to Republicans.

The 2020 total compares to just $29m spent during the 1992 election cycle, which means lobbying by the food industry has increased by sixfold in less than three decades as consolidation across the supply chain has boomed.

Supermarket chains dominate

Less competition among agribusinesses means higher prices and fewer choices for consumers – including where they can shop for food.

Until the 1990s, most people shopped in local or regional grocery stores. Now, just four companies – Walmart, Costco, Kroger and Ahold Delhaize – control 65% of the retail market.

“Corporate consolidation can drive up food prices and reduce access to food,” said Starbuck. “Supermarket mergers drive out smaller, mom-and-pop grocers and regional chains. We have roughly one-third fewer grocery stores today than we did 25 years ago, according to the US census bureau.”

As countless mom-and-pop stores struggled to stay afloat during the pandemic lockdowns, revenue for Walmart US hit $341bn – almost 3% higher than the previous year.

Grocery chains and superstores are also the main beneficiaries of government aid for Americans struggling to feed their families. In 2020, 82% of all food stamps were spent in supermarkets and superstores like Krogers, Walmart, Costco and Sam’s Club, which means the taxpayer contributed $64bn to their revenue.

The meat market – and sticky commodity prices

A spate of mega-mergers means that meatpacking plants are now controlled by just a handful of multinationals including Tyson, JBS, Cargill and Smithfield (now owned by the Chinese multinational WH Group). Proponents of capitalism claim mergers and acquisitions generate efficiencies that cut costs for farmers and benefit consumers by keeping prices down. But the tight grip these companies have over the industry means farmers have little choice about whom they sell to and how their animals are raised.

Pigs stand in a pen at a farm in Ayden, North Carolina. Photograph: Callaghan O’Hare/Bloomberg

Consumers pay more while profits for mega meat processors are booming: in 2020, the Brazilian firm JBS reported $51bn in revenue – a 32% rise compared with the previous year. China is driving much of the company’s growth, and JBS accounted for 50% of beef exports from the US last year. The proportion of arable land dedicated to producing meat is expanding but this is largely to feed consumers overseas. Per capita meat production flatlined in the US between 2005 and 2020, while the value of exports almost doubled.

Consumers are also hurt by so-called sticky prices. Commodity prices can rise due to shortages caused by unexpected events such as floods or drought that disrupt the supply chain – which happened at the start of the pandemic. When this happens, supermarkets are quick to increase prices to ensure profit margins remain intact, but when commodities go down, consumer prices are often much slower to decrease.