Grocery Update #30: Notes On A Trump Food Economy.

Also: How Target Wins With Big Food. & WSJ Covers Wholesale Fees.

Discontents: 1. Mass Deportations Means Trumpflation. 2. Trump Will Kill The Economy To Make America Great Again. 3. Project 2025 And Food Workers. 4. Feature Story: How Target Wins With Big Food. 5. Meet The New RoundUp, Worse Than The Old RoundUp. 6. Robyn O’Brien on #MAHA and Misogyny. 7. WSJ on Wholesale Fees. 8. Tunes.

1. Mass Deportations Means Trumpflation.

While Democrats still have a long way to go to making the economy and food supply sustainable and equitable, the Trump Campaign offers a range of terrible, backwards ideas that will make it worse. What a wonderful choice we have! So stoked.

But first the good news: “A recent Bloomberg News/Morning Consult poll found that 80% of likely voters in swing states liked Democratic nominee Kamala Harris’ plan to ban price gouging, including 78% of independents and 70% of Republicans.” We told you so.

We loved this great piece from Deena Shanker in Bloomberg illustrating how farmer advocates, farmworkers, economists and bankers, who rarely agree on anything, agree that Trump’s mass deportations will cripple the food supply and spike food prices. How will that make America healthy again? I would love to know. Please.

Here are the main points from Deena: “There are “1.7 million undocumented immigrants work in the food supply chain, according to a 2021 report from the Center for American Progress. The report listed almost 300,000 working in farming and agriculture; 206,000 in food production such as slaughterhouses and commercial bakeries; 154,000 in grocery and convenience stores; and 833,000 in restaurants…

“Undocumented immigrants often do the kind of dirty work many Americans don’t want to: They pick fruits and vegetables during heat waves while being exposed to toxic pesticides; they catch, load and hang live chickens, then cut up and package their carcasses, frequently getting injured in the process; to tend to the cows whose milk goes toward sating our unrelenting appetite for cheese…

“'One farmer told the publication he had to let a third of his produce die in the field because he didn’t have the help to harvest it. ‘We just don’t have the labor and it’s gonna get worse.’… ‘Enforcement-only immigration would cripple agriculture production in America,’ according to the American Farm Bureau Federation.

“‘The Federal Reserve Bank of Kansas City pointed to that worker shortage as a driving force behind the rising prices we’re all so busy complaining about. "‘When you lose workers, your ability to meet demand is going to go down.’

“‘Big corporate farms would be in a much better position after mass deportations compared to their smaller counterparts because they can absorb more of the increased labor costs’, says Baldemar Velasquez, president of the Farm Labor Organizing Committee, which operates in the Midwest and parts of the South. Small family farms—which make up 88% of all US farms—will get hit hard…

Deena concludes: “Whoever wins next week will have to figure out how to keep food prices under control, even as climate change and geopolitics continue to drive up costs. But if there’s one lever available to US politicians to bring those costs down, it’s making a bigger labor pool. A lot of people want to work in this country, many of whom are already here and many more hoping to come, and the food industry is just one that desperately needs them. When real, pragmatic and humane immigration reform is elusive, we all pay for it.” Word.

2. Trump and Musk: Kill The Economy To Make America “Great Again”.

“The world’s wealthiest man appears to believe that a Donald Trump presidency must crash the economy in order to benefit Americans. Elon Musk agreed on Tuesday that proposed drastic cuts to the federal government, coupled with Trump’s sweeping deportations, will likely cause global markets to “tumble.”… Last week, Musk said during a virtual town hall that Americans will experience a ‘temporary hardship’ for “long-term prosperity.” Sounds like they want to Argentina us.

“Trump has proposed a 20 percent tariff on all imported goods, including 60 percent tariffs on goods imported from China, a 100 percent tariff on goods from countries that have shifted away from trading with the dollar, and a 2,000 percent tariff on vehicles built in Mexico… A group of Nobel Prize-winning economists have warned that Trump’s economic plan will “lead to higher prices, larger deficits, and greater inequality.”

3. Project 2025 And Food Workers.

How Project 2025 will screw working people:

• Allow states and local governments to obtain waivers from federal labor laws like the Fair Labor Standards Act, potentially allowing states to ignore the federal minimum wage and other critical worker protections and safety standards.

• Let states apply for exemptions from the National Labor Relations Act, the law that protects the right to organize and makes intimidation and retribution against organizing workers illegal.

• Remove overtime pay requirements under the Fair Labor Standards Act.

• Make it much harder for workers to access unemployment benefits.

4. Feature: Target Wins With Big Food.

Grocery is always off to the side. It is not the main attraction, like Walmart. Walmart knows it owns grocery, vast aisles, bright and stocked produce when you walk in, followed by a dozen gargantuan aisles filled with floor to ceiling with every mass market pantry loader. Target is more coy. You need to find it. Beyond the apparel, shoes and surprisingly bright aisles of hip cosmetics. A diminuitive produce section. Some scattered avocadoes, tomatoes, bagged potatoes, a banana rack, an upright cooler of bagged lettuce, carrots, green beans. The most basic assortment of fruits and vegetables. Siri, show me a produce aisle with no imagination. Siri, does Trader Joe’s sell produce? (yes, even more than Target). But it is misleading, a bait and switch, a decoy. Because once you get past the awkward prologue, the rest of the story is impressive. By doubling down on the vast food monopolies that dominate packaged foods, Target is winning grocery.

Target’s last quarter financials looked good. Revenue was up 2.7% year over year while net income was up 42.75%, net profits were 4.68%, up 39%, gross margins healthy at 30%. While quarter to quarter trends may vary a bit, Target’s long term viability as a grocer has hit… the bullseye.

Target is a strange underdog. There are only a few chains playing at this level, but Target is underweight in grocery compared to rival Walmart, which owns 10 times market share (more on Walmart later, I promise). Target is not on par with club store Costco, 3 times larger in market share. Or Kroger, Albertsons and Ahold-Delhaize and their dozens of regional banners, each of which still outweighs Target by a factor of 2 or 3. Or Florida monopolists Publix, or Texas national grocery behemoth HEB. Or even Aldi, about even with Target in national share. So why Target?

Target may have finally realized they could leverage their scale, store count, locations, supply chains, their household name recognition and balance low food margins against their more profitable and popular apparel and household categories to actually sell food. And seriously sell it. From that you can gauge two major strategies. 1. The prices are very competitive, and they keep lowering them. They are not fucking around. The stores are bright, the marketing is inclusive, even stereotypically “woke”. And the clientele is more Real Housewives than Duck Dynasty. But the prices are tight, neck and neck with Walmart, not far off Aldi and usually better than the local supermarket. The other strategy is merchandising. 2. Retail brutalism. Big stores, wide aisles, lots of facings. Like Kroger in the Atlanta or Cinci regions. Huge sets of leading name brand products, shelves upon shelves of literally the same item, multiple facings, always packed out, to overcompensate for Target’s inventory management Achilles’ heel. Big brands in billboard patterns broken up by a smattering of in-house store brands and just barely tokenized emerging start up brands. It is obvious what pays the bills. Brutalism, big statements, abundant inventory levels, name brands, comfort, recognition, convenience, all-American industrial grocery, with best in market pricing.

Like Milk. Target’s private label Good & Gather (heretoforth known as G&G) brand, $3.49 a gallon, definitely not messing around. Several doors of milk, just milk, fat content by color scheme. A door of various lactose free dairy items and a couple of Horizon organic sku’s leading into a diversified door of plant based options, G&G, Oatly, Califia, Chobani. Silk, Ripple. The merchandising flow makes so much sense. Executing data based on psychology, customer behavior, price tiers, where choices should be limited and value pricing takes precedence to where choices are more important than pricing but pricing is still competitive, no insult pricing here. A big row of lunch meats and packaged cheese, clear plastic with salt, protein and fat. No mold contaminated Mr. Beast nonsense here, just the Oscar Meyer, Lunchables, G&G, Hormel and a little Applegate. Vast rows of shredded, bagged G&G cheese, color coded by type and variety of course, plus a few token Sargento, Tillamook, Babybels.

Peak industrial food system bounty, nothing sentimental here. Stocked by skilled labor, stacking and facing hundreds of boxes a shift in straight lines. At least 4 doors of frozen Tyson chicken, more meat in the freezer than a few scattered cold case items in a bunker cooler. Convenience rules the roost here, grilled strips, blackened, popcorn, “naturals”, because obviously the rest is unnatural? Sweet BBQ, no added hormones or steroids, side by side with two doors of G&G nuggets, dino nuggets, diced breasts, wing sections, tenderloins and more Tyson items. Tyson and Target, so happy together.  Protein for the whole family. The output of thousands of factory farms and millions of hours of production line time, billions of birds, abattoirred, processed, flash frozen, bagged and shipped in clean, matte finished, heat and eat packages, at very reasonable consumer prices, externalities be damned, the accountants won’t count them. Target proving their mettle, peak industrial food, just as promised 75 years ago as the U.S emerged from World War Two, food processed, abundant, convenient, ubiquitous and affordable. Despite trendy colors and fonts, not woke. Just basic retail brutalism, grocery modernism.

Doors upon doors of frozen pizza. Target batting above its weight class here, 1 sku per shelf starting with G&G, Red Baron, Totino’s, the usual suspects for 20 or 30 feet of frozen space, all that calorie dense, high fat, high salt, satiating and microwaveable cheesy, starchy convenience after a long day at work or a long night partying. And the frozen entrees, not to be ignored, Marie Callender’s, Stouffer’s, Lean Cuisine, meals in the $3-4 price range, way cheaper than takeout or buying all the ingredients yourself like Michael Pollan told you to, doors of Conagra’s best toe to toe with Amy’s biggest assortment, best in class Amy’s pricing under $6 for tasty organic, vegan and macrobiotic/culturally appropriated ayurvedic inspired entrees produced at mass market scale. And more than a few doors of industrial plant based analogues, Gardein, Morningstar. And G&G owning appetizers, wontons, potstickers, spring rolls, soup dumplings at 2/$10, more of a margin play but still not insult pricing.

Ice cream, the three B’s, a door each of Breyers, Blue Bell and Ben and Jerry’s, leading into another target PL, a “celebration” brand, for “occasions” as the marketers would say, Favorite Day. In muted, cool colors, with the basic items. Vanilla, cookies ‘n cream, neopolitan, chocolate at $4.99 a scround. And some frozen innovation, sea monster ice cream. What is that? Buy it at Target and tell me.

Bread, yes, they sell bread at Target. Not thrilling. Just mass market industrial loaves, white, bleached, shelf stable, Mrs. Baird’s, Sara Lee, Nature’s Own, Pepperidge Farm, Dave’s Killer, Martin’s, Wonder and Target’s own G&G, of course. Bread monopolies, same as nearly every other grocer, just convenient for when you need batteries, new shoes, kitchenware, an I-phone cord, at $2.99 a loaf for brands, $1.49 for G&G.

Not on the cutting edge at Target, just identifying, sku’ing down and scaling up the best sellers, simplifying the choice for consumers, maximizing sales for every square inch of shelf space, in the most distilled, focused expression of modernist food merchandising. Yogurt. Essentially a space war between Fage liter tubs, Chobani multipack cups and random Dannon sku’s, with some Siggi’s, Stonyfield, Noosa and other Whole Foods 2010 era trend leaders filling out the space.

Good & Gather bargain priced eggs, $3.19 for 18 eggs, 17 cents an egg, or breakfast for 35 cents. Strangely, $3.79 for a dozen of the same G&G eggs. And then $4.99 for organic large brown cage free, and assorted organic and cage free Eggland’s Best dozen eggs in the $5-$6 range, the category balancing a strong value tier alongside plenty of more profitable options at higher attributes and quality, all the way up to Vital Farms organic pasture raised for a healthy $9 a dozen. Ouch.

Center store, not actually in the center of the store, maligned to the perimeter but no less impressive. Familiar brands, brutalist merchandising, priced to kill. Couple shelves of yellow mustards and red Heinz bottles. A whole shelf of Bachan’s. Everyone loves that stuff all of a sudden. At least 12 feet of mayo and salad dressings, nothing exciting, G&G, Kraft, Hidden Valley, mostly corporate owned. Some Braggs shoehorned in below. Herdez lending some authenticity to salsa, the usual Pace and Pace private label knockoffs under G&G because Pace is still the national brand equivalent of salsa for some reason.

Soup wars, nothing exciting here, just Campbell’s, Chunky and Progresso, some broths, Pacific, etc. Pasta sauce aisle, not too different than a QFC or Ralph’s, Classico, Ragu, Rao’s, Bertolli, lots G&G and some newbies, Sauz, Carbone. Blue box mac ‘n cheese. In the aisle and on displays, so much Kraft M&C. Surprisingly, the bunny is not far behind, with a rainbow of Annie’s M&C skus across all items, formats, attributes, preferences, grassfed, organic, conventional gluten free, vegan, General Mills diversification strategy ready to fend off one massive section of the blue box, a school of piranha bunnies against the Kraft blue whale blue box, all in the $1-$3 range, affordable for anyone after school, after work, after divorce. And Wonder Woman’s Goodles, two full shelves elbowing out a couple token Banza skus. Mac and cheese dominance at target. Target owns mac and cheese.

Cereal, General Mills vs. Kellogg’s vs. Post, top 3 with 90% market share nationally, reflected here in the aisle, no sentimentality, just Big Cereal. Granola and bagged snacks to rival Trader Joe’s, just maybe easier to shop. G&G bold, blocky, color coded or Favorite Day muted cool tones, on sale 2/$8. Target snack wars victorious, a whole aisle of snacks, co-manufactured at scale to guarantee freshness and flavor at silly prices, with silly flavors for kids of all ages, pre-school through nursing homes. More favorite day monsters. Monster mix, peanut butter monster. Churro, macchiato. While G&G goes savory, tex mex, sweet cajun, smoky paprika, sophisticated CPG sophistry alongside Wonderful and Blue Diamond and Planter’s usual mix of pistachios, almonds, peanuts. Sku optimized, rationalized to the best sellers, trend savvy market leaders. Need I repeat myself? It is so obvious. Brutalist.

Tubs of pretzels and cheese balls. No trip to Target would be complete without a gallon plastic tub of starch bomb cheese balls and animal crackers. More snack brutalism, red box Cheez-it, 2/$7, red box Ritz, yellow box Wheat Thins, blue Triscuits, green Club crackers, shelves of blue Oreos, red Chips Ahoy, yellow Nillas. Kind vs. Clif vs. Lara Bar, also like Whole Foods 2010 or so, but here really Mars vs. Mondelez vs. General Mills, throw in a little Kellanova merger drama and the corporate consolidation of snacks is almost complete. Bagged snacks, samesies, several Frito Lay endcaps followed by several meters of Frito Lay linear space on shelf with the basic, optimized assortment alongside some Dot’s, On the Border, Snyder’s, G&G, Lesser Evil popcorns and Siete, soon to be Pepsi, cassava chips. Rows of Pepsi, Gatorade and Coca Cola. An endcap of holiday Oreos and Chips Ahoy. My dudes, it is 89 and humid out, I do not want hot cocoa chocolate chips or white fudge Oreos today. Kitty corner to the baby food, with dozens of pouches, organic, competitively priced Happy Baby, Earth’s Best, Plum, Serenity, Cerebelly, some G&G, maybe oversku’d but if the focus is on choices for young parents and their little ones, then it is winning.

Ultimate brutalism in cleaning and household. Massive racks of diapers, Even more massive sets of jugs, boxes, tubs of Tide, Gain, All, Ziploc, Hefty, Glad, Cascade, Seventh Gen, Chlorox, Downy and their own store brand Everspring, in warm lavender and lemon yellow and forest green accents, making you feel cleaner just by buying it. Big paper sets, clearcutting their way through British Columbia and northern Georgia, Kleenex, Bounty, Charmin, Scott, Cottonelle, with Up&Up and Dealworthy as a two tiered private label strategy.

Endcaps well thought out too, expensive brand investments in impulse merchandising. Full display of Pringles snack packs alongside a salty sweet CPG duopoly collab between Frito Lay and Mars, in case you need to alternate Cheetos and Snickers cravings. A beverage endcap, no sign, just $2.59 on sale, some hip, slim cans of a millennial marketed functional something with bright floral patterns, cursive fonts and warm/cool color patterns. This cynical Gen Xer instinctively avoids it.

Point of purchase pallet drop of Cheetos, stating emphatically IT’S A CHEETOS THING in case you were confused. So I instead grabbed a bag of New Orleans fave chips Zapp’s off a small rack by the checkout, just out of spite. A non sequitur localized impulse buy, a digression from the vast assortment of mainstream comfort foods, pantry loaders, exemplars of Big Food assortment domination, a distillation of grocery monopolies, oligopolies, and monopsonies in consumer friendly formats, at market leading prices. Dozens of packaged grocery categories are concentrated at 60, 70, 80% of sales among 3 or 4 brands, and that is Target’s main course, their merchandising bullseye. Grocery, not rocket science. The simplest go to market model is the winner. Seems on Target.

5. Meet The New RoundUp, Worse Than The Old RoundUp.

“Friends of the Earth finds that Roundup is more toxic than ever before. Bayer replaced glyphosate with combinations of four chemicals, two of which are banned in the European Union. The new Roundup formulations are 45 times more toxic to human health following long-term, chronic exposures, on average. They also pose significantly greater risks to the environment. Bayer has failed to remove glyphosate from all U.S. consumer Roundup products.

“Bayer announced it would remove glyphosate from consumer products starting in 2023 in response to tens of thousands of lawsuits linking the weedkiller to non-Hodgkin’s lymphoma. 

“Not only do several Roundup products still contain glyphosate, but eight new Roundup products contain chemicals of dramatically greater concern. Four chemicals have been linked to a variety of harms to human health, including birth and developmental abnormalities; reproductive dysfunction; kidney or liver damage; and irritation, inflammation, or allergic reactions affecting the skin, eyes, and respiratory system. The worst offender is diquat dibromide. It is 200 times more chronically toxic than glyphosate, is classified as a highly hazardous pesticide, and is banned in the European Union. 

“In addition to the threat to human health, the new Roundup weedkillers are more toxic to bees, birds, fish, aquatic organisms, and earthworms. They are also more persistent in the environment and more likely to leach into groundwater, increasing the risk of contaminating waterways and drinking water.”

6. Robyn O’Brien on #MAHA and Misogyny.

7. WSJ Covers Wholesale Sector.

Great mainstream coverage on wholesale fees and how tough food distribution can be. This will be familiar territory for Grocery Update readers.

“The granola maker, Wildway Foods, said the cost of making the cereal hasn’t gone up that much, and that it isn’t pocketing more profit. It jacked up the price, it said, in large part to offset fees that piled up from a little-known link in the supply chain: grocery distributors. There were charges for processing grocery promotions, others for potential spoilage and still more related to alleged shipping glitches… Grocers impose many of their own fees for things like promotion and shelf space, which distributors pass on to food companies. Distributors charge extra for processing those fees, and levy others themselves… Many smaller food makers complain they are being gouged, and that fees and other charges that stream in from distributors have forced them to raise their prices to stay in business.”

8. Tunes

So much anxiety lately. Need some De la Soul. RIP Plug Two AKA Dave Trugoy.

peace. for real. I mean it, especially this week.

peace.