An update on the Kroger-Albertsons merger, Walmart and Amazon change course
February's newsletter features Arizona starting a Kroger-Albertsons investigation, and 4 other consumer goods stories.
Kroger-Albertsons: Divestitures and More Statewide level scrutiny
Things I wrote
Walmart to close tech hubs, and return to in-person work
Amazon commits to physical retail
Post Buys J.M. Smucker's Pet Food Business
Rise of Natural Food
Note: It's a somewhat short newsletter this month. I'm currently working on some CAGNY recaps--which I'll publish sometime in March.
Kroger-Albertsons: Divestitures and More Statewide level scrutiny
Due to antitrust concerns, Kroger and Albertsons may divest some of their stores, potentially worth over $1 billion. Some U.S. lawmakers and consumer advocacy groups have called for the acquisition to be blocked over concerns the merger could result in higher grocery prices. Part of the concern comes from history. When Albertsons acquired Safeway in 2014, management agreed to sell 146 stores to West Coast regional grocer Haggen for $300 million. Haggen later filed for bankruptcy, and Albertsons bought many stores back at a steep discount.
Add Arizona to the list of states concerned about the merger
The Arizona Attorney General's Office will investigate the proposed merger between Kroger and Albertsons, looking for antitrust violations that could raise grocery prices and checking for signs that store closures or employment changes might harm local communities, potentially creating food deserts. About 17% of Arizonans live in food deserts clustered in the corners of the state, especially in the tribal areas of northeast Arizona.
Things I wrote
After two years of price increases, Kraft Heinz management says it's done raising prices - Slotting Fee
After the plant-based protein market collapses, Kellogg's will no longer divest Morningstar - Slotting Fee
P&G sees volumes decline, but is still committed to innovation - Slotting Fee
Despite higher prices, Mondelez, the maker of Oreos, is the rare CPG company selling more - Slotting Fee
Walmart to close tech hubs, and return to in-person work
Walmart will be close three of its U.S. technology hubs and is requiring employees to relocate to keep their jobs. The retailer will also require technology workers to come into the office at least twice a week. Walmart's technology team was previously remote, and its leader had aimed to make virtual work the new normal. Last week the company announced it would spend less on stock repurchases in 2023, investing in supply chain technology instead.
Amazon commits to physical retail
In a conversation with Financial Times, Amazon CEO Andy Jassy said the company plans to expand its grocery business, despite cutting investment and pulling back on nearly everything else. The company entered the $1.6 trillion U.S. grocery market when it acquired Whole Foods five years ago but has struggled to make an impact. Its inconsistent store formats make using the locations as local delivery hubs difficult. Jassy said the company plans to create new purpose-built stores in various styles and expand the online grocery business but acknowledges that people still want to "touch and feel" food before buying.
Post Buys J.M. Smucker's Pet Food Business.
In another sign that Pet Food is turning into one of America's most important growth categories, Post Holdings is set to acquire several pet food brands from J.M. Smucker. The $1.2 billion deal is set to close this spring. With brands Rachael Ray Nutrish, Kibbles' n Bits, 9Lives, and Nature's Recipe, Post will now have a foothold in the growing pet food category. Meanwhile, as the company said at CAGNY, J.M. Smucker will concentrate on pet snacks rather than pet food.
At 10,000 feet, here's the current pet food landscape:
Company Brand Parent Revenue Nestlé S.A. Purina $102B Mars Inc. Pedigree $45B General Mills Blue Buffalo $19B Colgate-Palmolive Hills Pet Nutrition $18B J.M. Smucker Milkbone $8B Post Holdings Kibbles' n Bits $5.8B Diamond Pet Foods Diamond Performance $1.5B
A growing category, with a lot of money entering it. Hard not to expect a battle.
Rise of Natural Food
Just Food has a nice summary of the rise of natural foods in America.