Grocery Update Volume 2, #8: Ace Natural's Alternative Wholesale.

Also: 100,000 Grocery Workers Rising Up. And Chex Foods Gets A Big Investor.

Discontents: 1. Miscellaneous stuff. 2. Ace Natural's Alternative Wholesale Model. 3. Chex Foods Gets A Big Investor. 4. 100,000 Grocery Workers Rising Up Across the U.S.

1. Miscellaneous:

The Checkout On The Tomorrow Today Show.

In this episode of The Tomorrow Today Show, host Mike Lee is joined by guest co-host Melanie Bartleme (Associate Director of Food & Drink, Mintel) to investigate the future of the grocery store. This episode explores the grocery store as a microcosm of our entire food system, uncovering forces shaping your shopping trip from store psychology to automation’s human cost. Guests: Melanie Bartleme (Associate Director, Food & Drink at Mintel) Doug Scholz (COO, California Grocers Association) Michael Robinov (CEO, Farm to People) Cameron Gould Saltman (Former Head of Food & Beverage, TikTok & Amazon Fresh) and Errol Schweizer.

Grocery Workers Fight Proposed SNAP Cuts.

LA Produce Market Gutted By ICE Gestapo Raids.

2. Ace Natural’s Wholesale Cornucopia.

A conversation with Tor Newman and Alberto Gonzalez, co-owners of Ace Natural.

What inspired the launch and growth of Ace Natural?

The idea to bring truly organic and wholesome foods to mainstream America and substitute conventional agriculture with organic agriculture. Organic food should be a right for all Americans and not a privilege of the wealthy and I think the way to achieve that is by growing the volume and thus making it affordable for more people.

Ace Natural was founded by Larry Vierling in 1995 as an answer to the burgeoning need for organic and natural foods in restaurants in New York City. He and I were working for a natural foods store in Manhattan which was getting calls from the local chefs asking for clean and organic ingredients. Larry’s concept was to always stick with natural and organic ingredients for food service (restaurants, juice bars, cafes and the like) while treating the customer “like gold”. The inspiration was/is to build a business centered around service and high-quality ingredients while taking care of the environment and the people we work with. Top quality service along with the best organic/natural ingredients has always been the calling card of Ace Natural.

The growth of Ace Natural has been organic (no pun intended) because we never took on investment or made big plays into the market. From the beginning until 2020, we stuck to the food service industry. For all those years working to satisfy our customers by sourcing what they requested and building a following with health-conscious restauranteurs and food service operators. We were organic before it was a trend and because organic was primarily a vegetarian movement at its beginnings, we became known for meat and dairy alternatives (first called vegan and now plant-based) Now we have one of the largest varieties of plant based foods stocked at a distributor of our size. In 2020, we began a focused effort to service the independent natural food stores with ingredients for their bulk bins, kitchens and produce departments.

As the other distributors in this space move farther away from organic and natural, we see a need to fill in for the original purveyors of these ingredients. We are currently one of the few if not the only distributor in our region to carry 100% certified organic fresh product only. We have been certified organic as a handler and distributor since 2013, were certified carbon neutral in 2016 and awarded the Greenest Distributor in the US by the Green Restaurant Association in 2018. We continue to be primarily a food service distributor but we understand the needs of the retailer and look forward to building that sector of our business.

What are your challenges, business priorities and employee, customer, and supplier relationship philosophies?

Covid had a huge impact in our business equation, it brought challenges everywhere, for example, the need of double the inventory to fulfill the same orders, too many old-time customers (restaurants) going out of business due to how harsh New York Metro business environment became… because for restaurants (less people in offices, way higher prices, etc.). Additionally, the lack of capital to grow, the need to develop our retail division faster and it not being easy to find good employees that are willing to work on site and not just remotely.

The challenges are being small and getting recognized for the quality of service/ingredients we have when the much larger competition is now able to provide similar ingredients at lower prices because of scale and different business models than we have. Recently in food service there has been so many customers going out of business and now with competition seeing our sector as a way for them to grow, we are fight against other distributors who are 10-100 times larger than we are. Our priority/philosophy is making all of our relationships win-win. We still have the “treat them like gold” mentality with our customers, employees and vendors as much as possible.

Why is sustainability important and how does Ace Natural try to walk the talk?

Because we cannot continue doing things like “business as usual” and expect to leave a better planet to future generations. The U.S. has about 6% of the global population and uses 35% of the world’s natural resources.. we need to lead by example, show that we can be successful, and many more companies will emulate what we do… We are a triple bottom line business model and that means that we look for profits, only as the consequence of doing the right things right for people and in harmony with the planet, but profits are never the main driver…

We love to make money, but how the money is made makes all the difference in the world.

We place people at the center of our business equation, and they are not the variable of adjustment for our bottom line… We don’t have investors because most investors only care about making money and when we explain that sometimes we make money and sometimes we don’t. they don’t like it. In other words. It is really hard to find like-minded people that are willing to take risk to make money and make meaning at the same time.

Sustainability is important because it the only way to have long term growth and profitability. Growth and profitability without paying attention to that generally does not work out and tends to make someone miserable. Without our commitment to the environment, we won’t be able to say we stand behind the original intention of organics…to create a better world with a food system that is not poison the earth and the people. Aside from the aforementioned certifications, we have walked the walk since the beginning but since 2012 we have had solar panels on the roof of our warehouses. Currently the system includes a 45,000 square foot roof filed with solar panels that provide at least 50-60% of our electrical needs. We have had clean engine trucks using biodiesel for more than 10 years now and we were some of the first to use hybrid-electric engines when they were available. We also see our relationship with our employees as being part of sustainability. We offer an extensive list of benefits to make employees part of something bigger. We offer health insurance, 401K matching, our food to be purchased at our cost, profit sharing, flex schedules and micro loans to name some.

What is the long-term vision?

Food is who we are. “We are what we eat” and “we change the world by what we eat” and therefore we need to stop feeding people with food full of chemicals, heavy pesticide, synthetic hormones, and GMO’s. Unfortunately governments are busy with short term policies and not too keen to regulate our sector properly, and therefore is it up to businesses to do something about it. Since younger folks are starting to be more interested in responsible companies, I am hopeful that gradually the demand will continue to change in the right direction. We at Ace will continue to do the best we can to help that trend.

The long term vision of the food industry should be to be more transparent about the food supply, build up organic farming and clean ingredients so that we are not poisoning ourselves and support win-win relationships within the industry so that it is sustainable for a future with huge environmental challenges ahead.

3. Chex Foods’ Growth Investment

Paine Schwartz Partners has successfully completed an investment in Chex Finer Foods, a specialty food wholesaler. Paine Schwartz is the largest private equity firm dedicated to sustainable food chain investing, with ~$6.5 billion of assets under managment and over 20 years of experience. The firm invests across specific segments of the food and agribusiness value chain, with a focus on two core themes: productivity and sustainability, and health and wellness.

Founded in 1965 and headquartered in Mansfield, MA, Chex is a third-generation family-owned business that distributes an extensive assortment of specialty and natural food products to independent grocery retailers, co-ops, natural food stores, and well-known regional and national chains, with industry-leading service levels. Beyond wholesale, the Company provides marketing support, custom sales programs, in-store merchandising, and competitive insights that help customers grow and win in a dynamic retail environment.

"We are thrilled about this strategic investment by Paine Schwartz, which marks the next phase in our effort to provide high-touch and value-added distribution services to our customers," said Jeremy Isenberg, CEO of Chex. "What makes Chex special is our people and our partnerships - and this next chapter is about amplifying both. With Paine Schwartz, we found a partner who understands our space, respects our values, and shares our long-term vision. Together, we plan to expand our capabilities, reach new geographies, and deepen the impact we make for our customers, our suppliers, and our team. I'm incredibly proud of how far we've come and even more excited about our bright future ahead."

“Chex at its core is about nurturing committed relationships, building brands and categories, and creating excitement in the marketplace. We love what we do, and that the Specialty Food business is fueled by passionate producers and innovative new products. We believe by helping our customers be successful, it will come back to us. I feel very fortunate to be surrounded by a team that embraces our mission to make a difference in the industry, and am grateful for the opportunity my Grandparents and Dad gave me to build on the foundation they created”

Angelos Dassios, Chief Investment Officer of Paine Schwartz, said, "After tracking Chex for over a year as part of our thesis buildout in the food distribution space, we are thrilled to partner with Jeremy and his team. From the first time we met Jeremy, we have been impressed with Chex's stellar reputation for reliability and service, best-in-class operating metrics, and long-standing supplier and customer relationships. We look forward to working closely with the Chex team and believe this strategic investment will accelerate Chex's growth in its next chapter, both organically and through strategic M&A."

In light of the recent cybercrime chaos at UNFI, the timing could not be better.

4. 100,000 Grocery Workers Rising Up Across the U.S.

Over 150,000 UFCW and Teamsters grocery store workers are currently negotiating for new collective bargaining agreements across the country. Tens of thousands of these workers, including workers in Colorado, Washington, and Southern California, are taking strike votes, ratifying collective bargaining agreements or preparing to strike.

Chronic understaffing at major grocery chains has impacted worker incomes and scheduling, with many unable to feed their families, while also impacting the daily lives of customers. From long lines and empty shelves to causing deceptive product pricing, the impact of understaffing is being felt in grocery stores across America.

In Colorado, Safeway and Albertsons workers in Metro Denver, Boulder, Broomfield, Castle Rock, Conifer, Evergreen, Fountain, Grand Junction, Idaho Springs, Parker, Pueblo, Salida, Steamboat Springs, and Vail all voted to authorize an unfair labor practice strike, in many cases unanimously. In Metro Denver, 99% of workers voted to strike.

“We have been more than patient for months as the company slashed our hours and ignored workers’ proposals on staffing and other key issues. Incredibly, Safeway and Albertsons have now chosen to walk away from a signed agreement for retroactive pay and benefit increases and instead are only offering increases going forward. This is the essence of bargaining in bad faith. Time has run out. My co-workers and I have authorized a ULP strike to address our concerns and make our workplaces better for us and our customers,” said Kevan Kohlman, a Safeway worker from Grand Junction and member of the negotiating committee.

UFCW Local 7 President Kim Cordova added, “Our union grocery store members at Safeway and Albertsons have now voted to authorize a ULP strike. At the bargaining table, this employer is holding hands with King Soopers and City Market to propose major cuts to workers’ healthcare benefits, and to threaten the financial security of our pension beneficiaries on fixed incomes, while continuing to reject meaningful efforts to address chronic understaffing in stores. On top of the concessionary proposals at the negotiating table, Safeway and Albertsons have gone back on their agreements.”

After months of negotiations, Colorado workers’ union contracts expired in January. Grocery store workers from UFCW Local 7 working at Kroger-owned King Soopers stores went out on a nearly two-week unfair labor practice strike in February.

Kroger and Albertsons are the two largest traditional grocery store chains in America, employing roughly 700,000 Americans between them. Both companies have enjoyed record profits since the onset of the pandemic in 2020, sending billions of dollars to Wall Street investors- instead of investing in the stores, on lower prices for consumers, and on improving the lives of their respective workforces. Workers have been negotiating for living wages, better staffing levels, affordable health care, and a reliable pension. These solutions have been rejected or ignored by the employers – with these employers instead trying to drive what used to be middle class jobs ever closer to minimum wage.

Ivan Lopez, a Safeway distribution center worker in Denver, said “We’d been clear since last fall that we needed them to address staffing, poverty-level wages, and ensure that workers health and pension benefits remain fully funded. Unfortunately, the company responded with unfair labor practices like refusing to negotiate fairly and threatening workers. The Company was unwilling to reach a compromise, so the countdown will now begin towards a potential unfair labor practice strike.”

“For months now, Safeway/Albertsons have been holding hands with their supposed competitor King Soopers and City Market by proposing workers take concessions on healthcare and retirement, while continuing to refuse to take meaningful steps to address chronic understaffing in grocery stores. These companies are even proposing to take benefits from retirees on fixed incomes. Workers have seen the billions of dollars in stock buybacks these two mega corporations have authorized in recent months on the back of record profits. These companies can afford to do better.” said Kim Cordova, President of UFCW Local 7.

UFCW Local 7 members at Kroger-owned King Soopers held a 10-day ULP strike back in February around Colorado. The hope at the time was that Safeway/Albertsons would heed the lesson of King Soopers and come to negotiations with proposals that the workers could agree to. For months they did not, and the 99% strike votes show how clearly they have missed the mark. The union wants companies to do the right thing, stop breaking the law with bad-faith bargaining, and provide workers and shoppers with a contract that will allow the stores to be run well.

In Seattle, UFCW 3000 reached an agreement to make gains on staffing, wages, healthcare and other benefits. With months of actions and overwhelming support for a strike authorization fueling our fight, our member-led bargaining team sat across the table from Kroger and Albertsons from June 12 to 15 and hammered out a fully recommended tentative agreement.

This tentative agreement pioneers new staffing language, establishes first-ever staffing programs at our stores, secures strong wage increases, fully funds our healthcare plan with no benefit cuts, provides a pension we can count on, adds a major investment into our apprenticeship and training fund, and significantly boosts our bargaining power in the region and in the western U.S.

Meanwhile, United Food and Commercial Workers (UFCW) Local 770 grocery store workers are hitting the picket lines in Los Angeles and San Luis Obispo as part of a week of practice ULP strike actions.

These actions follow the recent overwhelming ULP strike authorization vote impacting 45,000 UFCW workers across Southern California, coming just before critical contract negotiations scheduled to resume on June 25.

Even though stores remain open during these practice strikes, workers are using the picket lines to prepare for a potential full-scale ULP strike.

The unfair labor practices include surveillance, threats, and interrogation of employees. These union-busting tactics are designed to interfere with workers’ efforts to achieve a fair contract.

For four months, seven Southern California UFCW locals and their bargaining teams have been negotiating with Ralphs and Albertsons for a new contract that addresses several issues impacting store operations, working conditions, and customer service, including the severe staffing crisis.

The companies have dismissed workers’ proposals, calling their concerns “anecdotal, rather than addressing the real problems employees have brought to light.

These unionized workers have formed Grocery Workers Rising, made up of over 65,000 essential grocery workers across Southern California that are part of the largest union grocery contract in the nation, and are demanding living wages, affordable healthcare benefits, a reliable pension, more staffing and better working conditions for a better customer experience

Shoppers also face frustrations, with Consumer Reports catching Ralphs’ parent company, Kroger, overcharging customers by 18.4%. “Bullies at the Table,” a study by the Economic Roundtable found 92% of workers witness this practice, while a customer survey conducted by UFCW Locals 770 and 324, along with LAANE shows customers report severe understaffing at Kroger and Albertsons stores, leading to empty shelves, long lines, and added burdens on shoppers.

These efforts are part of a broader nationwide movement, with over 100,000 unionized grocery workers potentially striking Kroger and Albertsons stores simultaneously. Although they negotiate separately, Kroger and Albertsons workers with UFCW Local 3000 in Washington state and Local 7 in Colorado joined Local 770 to participate in strike-ready actions that could extend from California, to Colorado, to Washington and beyond. A summer strike would disrupt the busiest season for two of America’s largest grocery chains.

“Kroger and Albertsons have pushed us to this point by trying to intimidate us into accepting less than the fair contract we deserve,” said Paszion Horner-Smith, a Vons worker and member of the Local 770 bargaining committee from Los Angeles. “Today, we’re mobilizing - making signs, training for picket lines, and rallying our communities. This fight for a fair contract isn’t just about us; it’s also about every customer affected by empty shelves, long lines, and having to scan and bag their own groceries because these companies refuse to fairly negotiate around adequate staffing at the bargaining table.”

“From the Rockies to the Cascades to the Hollywood Hills, workers across the Western U.S. are united,” said Shawn McGee, a worker at Kroger-owned Fred Meyer in Seattle. “We are fed up with being disrespected by the grocery companies and our customers have our backs.”

Kerri Jaramillo, a King Soopers employee in Denver, Colorado, added, “I’m doing the work of two or three people, and they keep piling on more while cutting our hours. Even more since negotiations began, which is crazy. We’re getting squeezed from both sides of the counter.”

Kroger and Albertsons’ sales and profits skyrocketed 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, in addition to a nearly $10 billion in stock buybacks announced after the failed Kroger Albertsons merger. In order to fund Wall Street payouts and compensate for these Ecommerce losses, both Kroger and Albertsons reduced staffing levels in stores. In 2023, Kroger reported 14.1 percent fewer labor hours per store than in 2019 and Albertsons’ reported 13 percent lower staffing levels. and this potent combination of market dominance and cost cutting has been well-received by investors.

Albertson’s new CEO will be “presiding over a cost-cutting plan that aims to save $1.5 billion over the next three years. The company has laid off about 800 employees and shut nearly a dozen stores this year”, while Kroger has announced over 60 store closures. Both chains’ disinvestment and understaffing is causing a rapid loss in market share to Walmart, Costco and Aldi.

Chart: Grocery market share by retailer.

And back east, UFCW Local 1776 members across 34 Pennsylvania and West Virginia Giant Eagle supermarkets have overwhelmingly ratified a new four-year agreement with the Company.

“Our members turned out and voted 94% in favor of this new agreement,” said UFCW Local 1776 President Wendell Young IV. “I want to thank our bargaining committee for their hard work in negotiating a strong contract. This Agreement provides wage increases, improved retirement plan funding, and maintains the excellent health and welfare benefit our members have. I’m very proud of the work done by our members on this Bargaining Committee.”

“Through continued dialogue and collaboration with the company, we were able to find solutions to difficult issues. Our members are committed to serving their communities, and they appreciated the respect shown by the company’s representatives during this process.”

“We are excited to reach an agreement with UFCW Local 1776 that is supported by our Team Members and that reflects our appreciation for their commitment to meeting the needs of the communities we serve,” said Bill Artman, President and CEO of Giant Eagle. “We thank Local 1776 leadership for the collaborative, member-focused approach it brought to the negotiations for this new contract.”

UFCW 1776 serves workers in the grocery, retail, food manufacturing, health care and medical cannabis industries throughout Pennsylvania, the Ohio Valley and Hudson Valley. Giant Eagle, Inc. is ranked among the top 50 on Forbes magazine’s largest private corporations list, and is one of the nation’s largest food retailers and distributors. Founded in 1931, Giant Eagle, Inc. has grown to be a leading food, fuel and pharmacy retailer in the region with more than 470 stores throughout western Pennsylvania, north central Ohio, northern West Virginia, Maryland and Indiana.

peace. Really. We end each newsletter with peace every week. We mean it. Fuck War. peace.

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