Grocery Update #49: What’s Next for Kroger and Albertsons.

Also: U.S. Elections And Africa's Food System. And The Real Heroes Of The Super Bowl.

Discontents: 1. What’s Next for Kroger and Albertsons. 2. What The U.S. Elections Mean for Africa's Food System. 3. The Truth About Mexico’s GMO Corn Decree. 4. Seen In The Wild. 5. The Real Heroes Of The Super Bowl. 6. Tunes

Editor’s Note: We are staying busy over here at The Checkout Grocery Update. Our coverage last week got over 20,000 views, so we are super stoked that readers are interested in the grocery clerks and grassroots brands we platformed. Today, we have some cool guest posts, including a new take on the Super Bowl, an analysis from Claire Kelloway on the post-failed-merger Kroger-Albertsons dynamic, a really inspiring analysis from our IPES-Food colleague Million Belay on how the U.S. election is seen in Africa, and an update from Timothy Wise on Mexico and GMO corn. We also have a number of big projects in the works on mass market retail, cooperative food systems, food prices, and more. Stay tuned. And be safe out there.

1. What’s Next for Kroger and Albertsons.

By Claire Kelloway

Claire Kelloway is a senior reporter and researcher with the Open Markets Institute. Open Markets exposes the dangers of monopolization, identifies changes in policy and law to address them, and educates policymakers, academics, movement groups, and other influential stakeholders to establish open, competitive markets that support a strong, just, and inclusive democracy.

After two years of legal review, federal and state antitrust enforcers blocked Kroger’s proposed takeover of Albertsons. Albertsons promptly sued Kroger for allegedly botching their merger defense and divestiture proposal.

Albertsons’s CEO quickly stated that the company would “start this next chapter in strong financial condition” and Kroger said it is confident in its “value creation model to drive sustainable growth.” Both grocers then announced billions in stock buybacks and dividends to assuage investors.

This confidence contradicts months of warnings from Kroger and Albertsons that they needed to merge to compete with the likes of Walmart, Costco, and Amazon. Albertsons’s CEO went so far as to testify that it may have to lay off workers and close stores if it could not merge.

By the numbers, Albertsons and Kroger’s market positions were never as dire as their merger campaign implied. Each chain holds the first or second position in many regional markets. Their profits also remain high since the pandemic prompted more at-home meals. Albertsons’s annual earnings before interest, taxes, depreciation, and amortization (or EBITDA, a measure of profitability) grew from $2.5 billion in 2019 to $4.5 billion last year. Their annual net income increased nearly ten-fold over the same five-year period, rising from $131 million to almost $1.3 billion. Kroger’s EBITDA profits increased from just under $5.1 billion in 2019 to $6.8 billion in 2024 and its net income went from $1.6 billion in 2020 to $2.1 billion last year.

To be sure, these large traditional grocers do face some threats. Kroger and Albertsons have lost market share to Walmart, Costco, and discounters such as Aldi and Lidl over the last few years, and a distracting, costly merger battle didn’t help. Amanda Lai, director of food industry practice for McMillan Doolittle, says grocers like Kroger and Albertsons also face competition from specialty organic chains.

“Discounters are doing quite well in the current economic landscape and on the other end, natural and organic concepts are doing well,” Lai says. “It’s those in the middle that are really feeling the squeeze from both ends.” Lai says that Kroger and Albertsons are looking for ways to optimize and automate to cut costs as well as ways to differentiate themselves with unique store brands, loyalty perks, and tech investments.

Of the two chains, more analysts worry that Albertsons is behind Kroger in terms of competitive pricing and modernizing its stores and e-commerce. Albertsons has been deeply burdened by debts and asset-stripping following nearly 10 years of private equity ownership.

Albertsons has promised to cut $1.5 billion in costs over the next three years and started by laying off over370 white-collar corporate workers. Lai suspects that some stores slated for divestiture will close.

However, the chain is not in dire straits. Albertsons is the largest grocer in California and much of the mountain west. Albertsons sales are also growing faster than Kroger’s. Plus, many private equity investors sold their shares during the prolonged merger review and now only control 30% of the company, which could redirect priorities towards internal investment over cash grabs, like selling the real estate under stores.

“I don’t buy the sad violin music, I still think Albertsons is a dominant operator with significant cost advantages over competitors, with a lot of really strong stores and a strong supplier base,” said Errol Schweizer, former vice president of grocery for Whole Foods. Schweizer noted that Albertsons’s regional purchasing lowers barriers for local brands to get on shelves and improves product variety.

By contrast, the more dominant Kroger is slowing down. John Marshall, capital strategies director for the United Food and Commercial Workers Local 3000, argues that Kroger’s growth lags because the company has invested in costly and labor-intensive e-commerce ventures and cut back on labor hours. With fewer workers taking on more work to pack online orders, key customer services fall through the cracks; wait times increase, restocking falls behind, and floors don’t get cleaned. Meanwhile, e-commerce sales are still not profitable due to their tech and labor costs. Even Walmart loses money on e-commerce. These losses put more pressure on Kroger to cut labor costs or raise prices.

Despite these challenges, Kroger announced $7.5 billion in stock buybacks to boost its stock value after the merger failed. “Kroger effectively told investors, forget what we said about the existential threats of Walmart and Costco, here is $7.5 billion that we have nothing else to do with,” says Marshall. “That money could have renovated more stores than they have, built new stores to increase market share, or added 15 more full-time employees per store for three years. That would be transformative for customer service and sales growth.”

Albertsons similarly dedicated $2 billion to buy back its stock and increase dividends to investors. Schweizer and Marshall both think short-term pandering to shareholders will hurt the companies’ competitive position in the long term and also hurt consumers and workers.

“Any of these publicly traded companies, they’ve got the quarterly guillotine from Wall Street, in terms of their earnings, so they’ve always got to be focused on the next 90 days,” says Schweizer. “I think Kroger and Albertsons should be more circumspect and conservative in terms of shareholder buybacks and dividends, their stock should go up through better financial performance and better actual retailing.”

2. What Donald Trump's Election Means for Africa's Food System.

By Million Belay

Million Belay is Coordinator at Alliance for Food Sovereignty in Africa, the largest civil society organization in Africa, is a broad alliance working for food sovereignty and agroecology. AFSA champions small African family farming/production systems based on agroecological and indigenous approaches and resists the corporate industrialization of African agriculture.

February 7, 2025

The disruptor has arrived, and what is becoming evident now is that he was well-prepared, while the whole world, even his own country seems caught off guard on many issues. It has become a norm now that he is on the cover page of every newspaper, both electronic and paper. The news from yesterday quickly becomes irrelevant and old today.

Before he was elected, I had my share of arguments with several of my African brothers and sisters. How could they even consider him for president? The epitome of misogyny, lies, racism, capitalism, and now oligarchy I went on and on. Yet, there they were, claiming that Donald Trump tells the truth and that both America and the world would be better off. What truth? I feel that America is becoming rapidly the most untrustworthy and dangerous country in the world.

Let me be clear: I am not an ardent supporter of the Democrats. They interfere in my continent’s politics and day to day life far more than he does, and their actions in Gaza are abhorrent. But, both before and increasingly after his election, I keep asking myself: What does his election mean for Africa? Is there any good in it?

Here are some of my reflections, starting with the negatives.

1. Withdrawal from the Paris Agreement : This decision has far-reaching consequences. The Climate COPs are where international agreements are forged, even if what has been agreed upon falls far short of what is needed. Having the world’s largest polluter withdraw from the table is a disaster. It not only slows domestic progress in the U.S., making it harder for states to push for further cuts in greenhouse gas emissions, but it also sends a dangerous signal to other countries, discouraging them from committing to these agreements. The reduction in U.S. support for countries affected by the climate crisis will further endanger their efforts to tackle the climate emergency. My hope is that other actors, including China, India, and Europe, will step up to fill the gap and provide the necessary leadership.

2. Suspension of USAID: I cannot claim to fully understand the extent of U.S. support to Africa through USAID. While I am not pleased with their support for AGRA or their behind-the-scenes influence on our agricultural policies, including CAADP, I have heard that many aid programs for refugees and health initiatives will be affected. This will undoubtedly come as a shock to many. The rapidity of the dismantling of this gigantic institute, the biggest aid organization in the world, is breath taking.

3. Media and Misinformation: You may have seen the photo of his inauguration, flanked on both sides by the biggest tech giants: Google, Amazon, Meta (Facebook), X (Twitter), and ChatGPT. They have all agreed to make “information flow freely.” If you are like me—already disgusted and frightened by the level of misinformation circulating and exacerbating the crises in our countries—unregulated information flow is a disaster. You know that the algorithms used by these platforms exaggerate and multiply bad news and misinformation without any effort on your part. They do it automatically. Manufacturing and amplifying false and dangerous information is how they make money. What will this mean for populations like ours, which are often unquestioning and easily swayed?

4. Impact on Funders: I am also concerned about the impact on other funders. I have heard that many are hesitating to fund human rights-related agendas, opting instead for conventional and less controversial issues, such as development aid. This is a significant step backward in a world where fighting for the rights of farmers and other citizens is more critical than ever.

5. Economic Implications for Africa: Lastly, what does this mean for an already debt-ridden Africa? Statistics show that out of every three African countries, at least two are in debt distress. That means at least 36 African countries are struggling. This leaves little to no money for these nations to invest in social infrastructure, including education, health, and agriculture. What will his “Make America Great Again” agenda mean for us? I have heard that the U.S. has pulled out of negotiations to restructure international financial mechanisms. There is a growing understanding that the current international system is unfair to developing countries.

A Glimmer of Hope? You might laugh at my naivety, but the only potential positive I see is that he may not interfere in the affairs of our continent as much as the Democrats have. His withdrawal of funding from USAID agricultural initiatives might also create space for local initiatives, such as the agroecology agenda, to flourish. It could starve some institutions that have been pushing U.S. interests in our agriculture. I also hope that the push for gene-edited technologies will be significantly reduced, as much of the funding for promoting these initiatives comes through USAID. That said, I fully understand the pain this will cause for many important initiatives, especially in health sector.

The Path Forward: It is increasingly clear to me that we must support ourselves. The food sovereignty agenda has never been more critical. Imagine African governments dependent on external entities for their food, only for a foreign government to withdraw that support. The result would be starvation.

Let us all rally behind science-based, locally practiced, and proven agroecology. This is how we will achieve food sovereignty. Then, no matter who rises to power in any part of the world, we will at least have sufficient, healthy, culturally appropriate food on our tables produced without harming the environment and ensuring equitable provision for all.

3. The Truth About Mexico’s GMO Corn Decree.

By Timothy Wise

Timothy A. Wise is a researcher and writer whose three decades of work have focused on agriculture, the environment, international trade, and the right to food. He is an Investigative Journalist with U.S. Right to Know and a Senior Research Fellow at Tufts University’s Global Development and Environment Institute. He is also a Senior Advisor with the Small Planet Institute. He was a Senior Advisor on the Future of Food at the Institute for Agriculture and Trade Policy from 2000-2024. He is the author of Confronting Globalization: Economic Integration and Popular Resistance in Mexico, in addition to Eating Tomorrow.

On Feb. 5, Mexican President Claudia Scheinbaum published a revised directive that puts Mexico in compliance with a trade tribunal ruling that its restrictions on genetically modified corn violated the US-Mexico-Canada trade agreement (USMCA). The directive modifies the 2023 decree by rescinding the three articles that dealt with the tortilla GM corn restrictions and the so-called Substitution Instruction regarding a possible future replacement of GM feed corn with non-GM corn. The rest of the decree is left intact.

That may earn triumphalist headlines from the US and the industry, but again I would caution against triumphalism. While it is true that Sheinbaum made good on her vow to comply with the ruling despite disagreeing with it, and she didn't hold back that compliance as a bargaining chip in Trump's trade war, Mexico may well get most of what it wanted by other means. Why?

First, three important parts of the decree remain intact. The ban on GM corn cultivation remains, and it is set to be enshrined this month in Mexico's constitution. The phaseout of glyphosate is still on the books, still without a deadline, but the government continues to ramp up production of alternatives. And the decree's mandate for "traceability" of GM corn also remains, a measure that could effectively feed into legislated plans to label all foods containing GM ingredients.

I know there is great interest in Mexico in solving the GM tortilla problem without government mandates. The tortilla industry knows well that Mexicans do not want to eat tortillas containing GM corn, and on multiple occasions they have vowed publicly to keep GM corn out of the supply chain. So expect a system of voluntary labeling for "GM-free tortillas" with the only government role being a system of monitoring and sampling to ensure compliance. There goes the only thing that US corn exporters actually won, a small market for GM white corn for the tortilla industry. Because yellow corn farmers gain nothing with rescinding of the substitution measure since they had no deadline and had no effect, with exports rising since the 2023 decree, not falling.

The ruling also did not settle any of the scientific controversies over the safety of GM corn. The panel simply ruled that Mexico did not present its scientific evidence in a proper risk assessment, which gave it the luxury of not evaluating the science itself. So all those controversies will continue. Certainly the ruling did not convince anyone in Mexico that GM corn with glyphosate residues is safe to eat. The ruling did reinforce to Mexicans, however, that the USMCA is rigged to favor the US and multinational firms, and that could lead to more ambitious Mexican proposals in the negotiations to come on the revisions of the agreement.

4. Seen In The Wild.

Pretty sweet 3-Day deal at Kimberton on Dr. Bronner’s, and a beautiful display too. Read Gero Leson’s book on their supply chain.

Same day, same brand, different deal. Dr. Bronner’s peppermint bars of soap at Costco. Six bars for $22.99, $3.83 a bar, not bad, practically 2010 prices lol. Not as fun as reading the label on the bottle but still guaranteed to make your tukkis tingle.

5. Grocery Workers: The Real Heroes Of The Super Bowl.

(With all due respect to the Philadelphia Eagles. And Kendrick.)

Super Bowl Sunday was the second-biggest day for food consumption in the U.S., and workers like James Peete, a 12-year Ralphs employee, worked tirelessly to ensure customers had everything they needed for their celebrations.

James, a dairy-deli lead at Ralphs in Glendale, worked the graveyard shift and around the clock to stock game-day essentials like fresh guacamole, assorted dips, pre-packaged cheese platters, and ready-to-eat deli meats. Despite the challenges of understaffing at his store, James and his team were dedicated to making sure shelves were fully stocked and customers were ready to host their Super Bowl parties.

A father of four, James sacrificed small luxuries, like his daily kombucha, to stretch his paycheck for his daughters’ school and gymnastics expenses. His story is a testament to the dedication and resilience of grocery store workers who go above and beyond to serve their communities.

This year, as part of the Grocery Workers Rising contract campaign, James and his coworkers are advocating for fair wages, secure health benefits, reliable retirement plans, and adequate staffing levels. Their efforts aim to improve both employee well-being and a good shopping experience for customers.

6. Tunes.

We really can’t talk about Africa and not tune into Fela Kuti.

peace.

(Perspectives are 100% our own and do not reflect those of our sponsors).