5 ms·

Monopolies across the grocery supply chain squeeze consumers, small businesses

103 points by cainxinth 2y ago

throwawaysleep 2y ago
> to help keep small businesses alive. That’s what a lot of this concern is really about. Legal bailouts for mediocre boomers who run inefficient, unambitious businesses with high prices. Small businesses try to guilt you for your business as they rarely offer something worth buying on the merits unless they occupy a niche. > Walmart and scattered Dollar Generals fill the void left by shuttered independent grocers. Frerick worries about the mid-level grocers “collaps[ing] like the rest of America.” “Independent” in this case meaning high priced grocers people didn’t want to shop at. They got wiped out for being unable to control their costs.
- Nifty3929 2y ago
  Indeed, do we shop for groceries in order to provide businesses with revenue, or does a business exist to serve customers? If the latter, and some business don't serve our needs as well (e.g. higher prices, poor selection or bad service), then should we not be able to patronize businesses that do?
- lotsofpulp 2y ago
  Nature presents the efficiency vs security dilemma almost everywhere you look. One is always traded off for the other, especially between the short term and long term. Efficiency lowers costs (especially in the short term), but increases risks in the long term (less resiliency/options when things go wrong). Things going wrong can also mean a business with pricing power deciding to increase profit margins (and/or reduce quality/quantity of services).
- hammock 2y ago
  Walmart and drug store retail “control their costs” by using their market power to shift them up-chain. Their suppliers are required to stock and rotate inventory (as opposed to the retail employees). Unsold and expired product is required to be bought back by suppliers. If a retail buyer finds out a supplier has extra funds they will call and require that the supplier buy advertising on their homegrown retail media network (a shakedown). It’s a racket
- lotu 2y ago
  Walmart is notorious for coming into an area and running at a loss until it has eliminated all the competition then jacking up prices.
  - chung8123 2y ago
    Is that true? Or does it just seem that way because it takes time for places to go out of business competing with Walmart and during that time we have inflation. Is it proven that Walmart operates at a loss for some of their stores for a while?
  - kaibee 2y ago
    Is this true? It definitely sounds truthy and would confirm my biases. But I could just as well see: 1. Walmart opens location 2. Prices things to get a small margin 3. Competition is driven out because consumers don't want to go to multiple stores to get everything they need 4. Suppliers raise costs, inflation happens, market conditions change, etc. (it would even make sense for the supplier to raise prices if they have less independent customers, to account for the risk of only having 1 big customer) 5. Someone writes an article about how X is more expensive now at Walmart than it was at random shop, years ago.
- llm_trw 2y ago
  >That’s what a lot of this concern is really about. Legal bailouts for mediocre boomers who run inefficient, unambitious businesses with high prices. The free market only works when both consumers and producers are atomised and unable to exert market influence. Both billionaires, unions, conglomerates, vertical integration and every other trick labor or capital uses to increase their bargaining power are market failures. In short: if you like capitalism you need trust busting along with union busting.
  - aaomidi 2y ago
    Certainly a take.
    - llm_trw 2y ago
      That's the definition of a free market in every economics textbook.
      - jjk166 2y ago
        It's actually the opposite of what free market means in economics textbooks. The textbook definition of a free market is an economic system in which prices are determined by unrestricted competition between privately owned businesses. Monopoly busting and union busting are both government interventions that are explicitly not supposed to happen in a free market.
- drewcoo 2y ago
  > “Independent” in this case meaning high priced grocers people didn’t want to shop at. Not necessarily high-priced. Expense to the consumer (me) is also measured in time. Maybe the little stores didn't have a large selection, so a shopper who went there would have to go to the big store anyway. Why waste time? Just go to the big one. I'm guilty of that behavior. Flip that story a bit and I've also bought more expensive individual items at a small store close to me when it was "an emergency." Higher prices were outweighed by my time saved. > occupy a niche The indies that seem to exist in most of the country seem to be ethnic specialty markets or local produce/meat/etc. Near me in my little Iowa town are Korean, Mexican, and Egyptian grocers, fruit/veggie produce, and butcher shops. There's also the pretentious Co-op. I should add that the farmer's market is always bustling and also isn't being put out of business by the Walmart. And this is flyover country. It's not like when I was in Manhattan and within a block of me had 2 bodegas, 2 bakeries, a seafood store, a cheese shop, and a butcher. I'm sure I've left things off both of those lists. > Legal bailouts for mediocre boomers who run inefficient, unambitious businesses with high prices No, they're for things deemed to be for the public good despite the ravages of the "free market," by which today we mean acceptable monopolies.
azinman2 2y ago
I really wish we could return to an era of congress that had appropriate mistrust in business and a strong desire for anti-trust busting. I think it’s one of the most important things we could do to prevent capitalism from going off the rails.
- djfobbz 2y ago
  You make an important point. Not all capitalism is equal. When big businesses like Monsanto lobby politicians to have it their way, it’s not capitalism but rather corruption and coercion. This undermines the free market principles we value. In contrast, capitalism at the small business level is often more innovative and agile, quickly adapting to market changes and consumer needs. Supporting small businesses and ensuring a fair playing field can help prevent capitalism from going off the rails and foster a more dynamic and equitable economy.
  - nayuki 2y ago
    https://en.wikipedia.org/wiki/Crony_capitalism https://en.wikipedia.org/wiki/Crony_capitalism , https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture , https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
  - soco 2y ago
    I don't think for the small customer the wording has any significance. Is it capitalism or cronyism or you-name-it, they get shafted because that's the only criterion for a big business "success": grabbing all the money from the table for the goal of maximizing profits. All fine and nice and free in theory, but in the practice it works like this (look around). So I'm sorry I don't buy this "no true scotsman" argument, be it for capitalism or for communism or anything else. It only matters how it works in reality, and I don't like much how it works.
    - Jensson 2y ago
      You know USA had capitalism in the 60s as well? That was also reality, capitalism often works really well in reality. And even USA today isn't a bad place to live, if that is a bad case of capitalism then that is a risk well worth taking.
Nifty3929 2y ago
It's unfortunate that the word monopoly is losing it's meaning. Formerly, it meant a business that had an overwhelming or total share of the entire market, plus high barriers to entry. Now it just means a big business, or the only option in my neighborhood. Supermarkets aren't especially profitable these days, and downward pressure on suppliers ultimately serves consumers anyway. The grocery business is very competitive, with incredible price transparency and low margins.
- 1oooqooq 2y ago
  you really cannot see the connection?
- rqtwteye 2y ago
  This comes at the expense of quality and variety though. A market economy will not flourish if there are only a few big players. We need small businesses to be able to innovate.
  - lotsofpulp 2y ago
    The buyers in the market almost always choose the lowest prices. Hence the success of Walmart/Kroger/Albertsons/Costco/Target/Aldi/Dollar General/etc. There might be room for one sort of upscale grocer on the richer side of town, but I doubt there is space for more.
    - banannaise 2y ago
      That's not an iron law, though. Some consumers will always choose based on price, but for others, it is a function of experience. I, for one, am happy to pay a bit more for a higher-quality product, but my experience tells me that a slightly higher price is indicative of marketing rather than product quality. So why doesn't anyone fill that niche? Perhaps in part because the market is so consolidated. There's little incentive for the small handful of major players to cannibalize their own products. So we end up largely with two options: the cheapest version of the thing that is possible to manufacture, and an extremely high-quality artisan product costing multiple times as much.
rqtwteye 2y ago
Seems we have reached 1910 again and need somebody like Teddy Roosevelt for some trust busting.
- throwawaysleep 2y ago
  Consider how much people spent on food back then vs now. Consider the percentage people in smaller countries without large efficient firms spend on food. Consider the far high prices of Canadian milk, cheese, eggs, and chicken as the law caps production and provides no way to eliminate smaller inefficient producers by outcompeting them. Nowhere in the world spends a lower percentage of income on food than the USA. https://ourworldindata.org/grapher/food-expenditure-share-gdp?country=~USA https://ourworldindata.org/grapher/food-expenditure-share-gd... The system works for consumers. Tremendously well.
  - llm_trw 2y ago
    In 2022, before the bulk of the current inflation materialized. Saying it worked before is a bit like saying "I can't have diabetes, I played football in highschool!".
  - lotu 2y ago
    I'm not sure that data is super telling, all it means is the food is a lower percentage and giving the costs of education, housing, and insurance perhaps not that surprising.
  - HumblyTossed 2y ago
    You know, you're right. We should be perfectly okay with things just the way they are. In fact, let's just keep going until there's only one big player in every market!
  - justinlloyd 2y ago
    This reads like whataboutism. Very disingenuous.
- bryanlarsen 2y ago
  Exactly! We need a president who would appoint a radical trust-buster like Lina Khan to the FTC.
Scoundreller 2y ago
2021 article from the Guardian: “ A handful of powerful companies control the majority market share of almost 80% of dozens of grocery items bought regularly by ordinary Americans, new analysis reveals.” https://www.theguardian.com/environment/ng-interactive/2021/jul/14/food-monopoly-meals-profits-data-investigation https://www.theguardian.com/environment/ng-interactive/2021/...
- throwawaysleep 2y ago
  Nowhere in the world spends a lower percentage of income on food than the USA. https://ourworldindata.org/grapher/food-expenditure-share-gdp?country=~USA https://ourworldindata.org/grapher/food-expenditure-share-gd... So I would argue that other countries, if they want to tame inflation, should allow their smaller inefficient producers to get squeezed.
  - seventyone 2y ago
    This is true but people will react negatively to this data regardless. The US does have this advantage, but you can also argue that the tradeoff is our food quality is much worse than other western countries.
  - myrmidon 2y ago
    That graph is misleading at best, especially for the US. If total consumer spending in the US is 50k and in Italy 20k, then it seems rather obvious to me that Americans are gonna spend a smaller fraction of that on food... If you run the numbers, those two countries spend, in fact, almost the same dollar amount on food (3.2k vs 3.5k).
  - jjk166 2y ago
    Or the wealthier a nation is, the less political will exists to go after monopolies.
  - Clent 2y ago
    This doesn't mean our food is cheaper. It could mean that we have other budget items that are larger than in other countries, such as healthcare costs. We almost spent more on childcare costs than countries further to the right in that graph.
boHarper 2y ago
[dead]
chasil 2y ago
Has this penetrated Aldi's, which uses in-house brands for the majority of their products? Is Aldi's a good way to avoid these monopolies? From the article, does Aldi's avoid?: - Late delivery fees from vendors (or is it better than Walmart?) - Slotting Fees - Sundry wholesaler and retailer fees - Price dependence on Tyson and other abusive suppliers
- throwawaysleep 2y ago
  Given that people in this thread are angry at vertical integration, I would bet that Aldi would be the first hit by many laws.
  - sithadmin 2y ago
    Would depend on what exactly 'vertical integration' is defined as. Most grocers' house brand items are produced by 'white label'/contract manufacturers that supply many different grocers. It's cutting one or at best two steps from the supply chain instead of true vertical integration. HEB (the major player in the Texas market) is a notable exception that has true vertical integration, with in-house manufacturing and packaging facilities producing house brands, and its own direct relationship with raw goods/farm suppliers.
- bilsbie 2y ago
  I recently discovered this store. Literally seems to be half the price of my local grocery store and even more important I’m not overwhelmed with choices.
- njovin 2y ago
  I don't know about Aldi's but Trader Joe's (which also uses a lot of in-house brands) seems to suffer from this but to a lesser extent and with some lag compared to the competition. This is all anecdotal, but when egg prices went crazy it was several months before TJ's prices crept up (and even still they are reliably lower than major competitors). Same with meat products - for several months they're house-branded stuff was quite a bit cheaper than Vons/Albertons/Ralphs but they've slowly crept up and are now basically on-par.
jmpman 2y ago
I went to the lake last week. Before heading out, I went to the grocery store to buy some soda, an infrequent purchase in my household, and was stunned to find a 12 pack for $9.99. That was at least double the price I expected. Trying to understand where this pricing anomaly came from, I started checking out historical commodity prices. A bushel of corn for today versus 2011 - almost unchanged. Aluminum for today versus 2011 - almost unchanged. Transportation costs? West Texas Intermediate crude for today versus 2011 - almost unchanged. It’s either the caramel coloring or the water… Or the lack of competition. After I left the store, I did check their ad, and found a 12 pack of a lower tier soda for $3.50 Someone is making 60 points of margin on the $10 12 pack. That seems extreme for what is effectively corn syrup and water in an aluminum can.
- cosmotic 2y ago
  Brand-name soda at my local store is similarly priced but often on sale, 3 12-packs for $12 or similar (must buy 3).
  - rolph 2y ago
    im accustomed to seeing this when its overstocked, it always seems to be interpreted as normal practice, rather than regular price should drop a bit.
- practicemaths 2y ago
  Price of branding I imagine. People are willing to pay the price so you may as well charge as much until sale revenue goes down.
  - jmpman 2y ago
    I agree. The demand curve has shifted as people have the cash and aren’t willing to substitute other products.
- VancouverMan 2y ago
  > It’s either the caramel coloring or the water… Or the lack of competition. There could be a lot of other factors involved. Governments and unions can add a tremendous amount of artificial cost/overhead to goods and services, too. A minimum wage increase or new collective bargaining agreements, for example, can increase costs throughout a supply chain, from manufacturing, to transportation, to retail. A new or increased vehicle fuel tax, or a more general "carbon" tax, are examples of government policies that can also repeatedly distort pricing throughout a supply chain. Also, keep in mind that the pricing of the lower-tier grocery products might not reflect the actual cost to the retailer. Such products are often sold as loss leaders. The actual cost may be much closer to the cost of the higher-tier products, but this isn't apparent to the customer thanks to the retailer subsidizing the product. Cheaper grocery products can sometimes use inferior ingredients or lower-cost alternative ingredients, too. Comparisons with more expensive products may not be realistic because they're fundamentally different products, even if they may seem similar to the consumer.
chung8123 2y ago
Honestly I am always surprised how cheap food can be by mass producing it. How can pork chops cost 0.99/lbs or a whole chicken roasted but $5? I know these are sale items but I can feed myself so inexpensively and in general most of the food is pretty healthy (vegetables, some fruits, etc). These supply chains maybe squeezing profit but the likelihood a small business could even come close to the prices they have is small.
cl42 2y ago
I think this is particularly bad in Canada, where most of the brands are owned by two or three companies, and there has been clear evidence (and penalties) for price fixing. Would love to hear what Canadians think about this + if they see any innovation on the horizon.
AtlasBarfed 2y ago
Monopolies and cartels are basically the entire US economy. At this point it's basically proven to be the end state of any "free" market in the real world. Technological innovation is the only thing that truly disrupts monopolies and cartels.
- swagasaurus-rex 2y ago
  There’s a legal mechanism to merge companies through aquisition. There is no legal mechanism to split a company up. Even bankruptcy is case by case and doesn’t always result in a split.
  - tocs3 2y ago
    I don't know but I have heard about companies spinning off smaller companies.
xrd 2y ago
Does anyone have any sources for differences by region? I live in Florida currently, and my brother visited from Oregon. He mentioned that Publix was significantly more expensive for groceries than in Oregon. Florida has a lot of retirees and vacationers, so I assume that Publix executives might say: "hey, if we bump the prices 10% in these tourist areas around Orlando, those midwestern snowbirds won't bother to shop around and will pay it without complaint. And, the German family on vacation won't know any better." If true, this would be risky, because someone could figure out what prices are radically different in different areas at the same store. Pricing is so dynamic, and these production chains are so complex, it feels like an impossible task. And, it would be fun to explore. Anyone know?
- nojvek 2y ago
  Publix is expensive indeed. Aldi is usually a lot cheaper than Publix and Walmart. That being said when I visited Seattle area, Fred Meyers was more expensive than publix for groceries, and Safeway was selling $50 Orchids.
DavidPeiffer 2y ago
Austin Frerick has had a number of really great interviews since launching his book. Among others: Odd Lots had him on, which is where I first heard about his work. https://podcasts.apple.com/us/podcast/the-mega-corporations-that-control-what-americans-eat/id1056200096?i=1000650703441 https://podcasts.apple.com/us/podcast/the-mega-corporations-... And an Iowa Public Radio interview https://www.iowapublicradio.org/podcast/river-to-river/2024-05-31/iowan-writes-about-corruption-in-americas-food-industry https://www.iowapublicradio.org/podcast/river-to-river/2024-...

103 points by cainxinth 2y ago

> to help keep small businesses alive. That’s what a lot of this concern is really about. Legal bailouts for mediocre boomers who run inefficient, unambitious businesses with high prices. Small businesses try to guilt you for your business as they rarely offer something worth buying on the merits unless they occupy a niche. > Walmart and scattered Dollar Generals fill the void left by shuttered independent grocers. Frerick worries about the mid-level grocers “collaps[ing] like the rest of America.” “Independent” in this case meaning high priced grocers people didn’t want to shop at. They got wiped out for being unable to control their costs.

Nifty3929 2y ago
Indeed, do we shop for groceries in order to provide businesses with revenue, or does a business exist to serve customers? If the latter, and some business don't serve our needs as well (e.g. higher prices, poor selection or bad service), then should we not be able to patronize businesses that do?
lotsofpulp 2y ago
Nature presents the efficiency vs security dilemma almost everywhere you look. One is always traded off for the other, especially between the short term and long term. Efficiency lowers costs (especially in the short term), but increases risks in the long term (less resiliency/options when things go wrong). Things going wrong can also mean a business with pricing power deciding to increase profit margins (and/or reduce quality/quantity of services).
hammock 2y ago
Walmart and drug store retail “control their costs” by using their market power to shift them up-chain. Their suppliers are required to stock and rotate inventory (as opposed to the retail employees). Unsold and expired product is required to be bought back by suppliers. If a retail buyer finds out a supplier has extra funds they will call and require that the supplier buy advertising on their homegrown retail media network (a shakedown). It’s a racket
lotu 2y ago
Walmart is notorious for coming into an area and running at a loss until it has eliminated all the competition then jacking up prices.
- chung8123 2y ago
  Is that true? Or does it just seem that way because it takes time for places to go out of business competing with Walmart and during that time we have inflation. Is it proven that Walmart operates at a loss for some of their stores for a while?
- kaibee 2y ago
  Is this true? It definitely sounds truthy and would confirm my biases. But I could just as well see: 1. Walmart opens location 2. Prices things to get a small margin 3. Competition is driven out because consumers don't want to go to multiple stores to get everything they need 4. Suppliers raise costs, inflation happens, market conditions change, etc. (it would even make sense for the supplier to raise prices if they have less independent customers, to account for the risk of only having 1 big customer) 5. Someone writes an article about how X is more expensive now at Walmart than it was at random shop, years ago.
llm_trw 2y ago
>That’s what a lot of this concern is really about. Legal bailouts for mediocre boomers who run inefficient, unambitious businesses with high prices. The free market only works when both consumers and producers are atomised and unable to exert market influence. Both billionaires, unions, conglomerates, vertical integration and every other trick labor or capital uses to increase their bargaining power are market failures. In short: if you like capitalism you need trust busting along with union busting.
- aaomidi 2y ago
  Certainly a take.
  - llm_trw 2y ago
    That's the definition of a free market in every economics textbook.
    - jjk166 2y ago
      It's actually the opposite of what free market means in economics textbooks. The textbook definition of a free market is an economic system in which prices are determined by unrestricted competition between privately owned businesses. Monopoly busting and union busting are both government interventions that are explicitly not supposed to happen in a free market.
drewcoo 2y ago
> “Independent” in this case meaning high priced grocers people didn’t want to shop at. Not necessarily high-priced. Expense to the consumer (me) is also measured in time. Maybe the little stores didn't have a large selection, so a shopper who went there would have to go to the big store anyway. Why waste time? Just go to the big one. I'm guilty of that behavior. Flip that story a bit and I've also bought more expensive individual items at a small store close to me when it was "an emergency." Higher prices were outweighed by my time saved. > occupy a niche The indies that seem to exist in most of the country seem to be ethnic specialty markets or local produce/meat/etc. Near me in my little Iowa town are Korean, Mexican, and Egyptian grocers, fruit/veggie produce, and butcher shops. There's also the pretentious Co-op. I should add that the farmer's market is always bustling and also isn't being put out of business by the Walmart. And this is flyover country. It's not like when I was in Manhattan and within a block of me had 2 bodegas, 2 bakeries, a seafood store, a cheese shop, and a butcher. I'm sure I've left things off both of those lists. > Legal bailouts for mediocre boomers who run inefficient, unambitious businesses with high prices No, they're for things deemed to be for the public good despite the ravages of the "free market," by which today we mean acceptable monopolies.

azinman2 2y ago

I really wish we could return to an era of congress that had appropriate mistrust in business and a strong desire for anti-trust busting. I think it’s one of the most important things we could do to prevent capitalism from going off the rails.

djfobbz 2y ago
You make an important point. Not all capitalism is equal. When big businesses like Monsanto lobby politicians to have it their way, it’s not capitalism but rather corruption and coercion. This undermines the free market principles we value. In contrast, capitalism at the small business level is often more innovative and agile, quickly adapting to market changes and consumer needs. Supporting small businesses and ensuring a fair playing field can help prevent capitalism from going off the rails and foster a more dynamic and equitable economy.
- nayuki 2y ago
  https://en.wikipedia.org/wiki/Crony_capitalism https://en.wikipedia.org/wiki/Crony_capitalism , https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture , https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
- soco 2y ago
  I don't think for the small customer the wording has any significance. Is it capitalism or cronyism or you-name-it, they get shafted because that's the only criterion for a big business "success": grabbing all the money from the table for the goal of maximizing profits. All fine and nice and free in theory, but in the practice it works like this (look around). So I'm sorry I don't buy this "no true scotsman" argument, be it for capitalism or for communism or anything else. It only matters how it works in reality, and I don't like much how it works.
  - Jensson 2y ago
    You know USA had capitalism in the 60s as well? That was also reality, capitalism often works really well in reality. And even USA today isn't a bad place to live, if that is a bad case of capitalism then that is a risk well worth taking.

Nifty3929 2y ago

It's unfortunate that the word monopoly is losing it's meaning. Formerly, it meant a business that had an overwhelming or total share of the entire market, plus high barriers to entry. Now it just means a big business, or the only option in my neighborhood. Supermarkets aren't especially profitable these days, and downward pressure on suppliers ultimately serves consumers anyway. The grocery business is very competitive, with incredible price transparency and low margins.

1oooqooq 2y ago
you really cannot see the connection?
rqtwteye 2y ago
This comes at the expense of quality and variety though. A market economy will not flourish if there are only a few big players. We need small businesses to be able to innovate.
- lotsofpulp 2y ago
  The buyers in the market almost always choose the lowest prices. Hence the success of Walmart/Kroger/Albertsons/Costco/Target/Aldi/Dollar General/etc. There might be room for one sort of upscale grocer on the richer side of town, but I doubt there is space for more.
  - banannaise 2y ago
    That's not an iron law, though. Some consumers will always choose based on price, but for others, it is a function of experience. I, for one, am happy to pay a bit more for a higher-quality product, but my experience tells me that a slightly higher price is indicative of marketing rather than product quality. So why doesn't anyone fill that niche? Perhaps in part because the market is so consolidated. There's little incentive for the small handful of major players to cannibalize their own products. So we end up largely with two options: the cheapest version of the thing that is possible to manufacture, and an extremely high-quality artisan product costing multiple times as much.

rqtwteye 2y ago

Seems we have reached 1910 again and need somebody like Teddy Roosevelt for some trust busting.

throwawaysleep 2y ago
Consider how much people spent on food back then vs now. Consider the percentage people in smaller countries without large efficient firms spend on food. Consider the far high prices of Canadian milk, cheese, eggs, and chicken as the law caps production and provides no way to eliminate smaller inefficient producers by outcompeting them. Nowhere in the world spends a lower percentage of income on food than the USA. https://ourworldindata.org/grapher/food-expenditure-share-gdp?country=~USA https://ourworldindata.org/grapher/food-expenditure-share-gd... The system works for consumers. Tremendously well.
- llm_trw 2y ago
  In 2022, before the bulk of the current inflation materialized. Saying it worked before is a bit like saying "I can't have diabetes, I played football in highschool!".
- lotu 2y ago
  I'm not sure that data is super telling, all it means is the food is a lower percentage and giving the costs of education, housing, and insurance perhaps not that surprising.
- HumblyTossed 2y ago
  You know, you're right. We should be perfectly okay with things just the way they are. In fact, let's just keep going until there's only one big player in every market!
- justinlloyd 2y ago
  This reads like whataboutism. Very disingenuous.
bryanlarsen 2y ago
Exactly! We need a president who would appoint a radical trust-buster like Lina Khan to the FTC.

Scoundreller 2y ago

2021 article from the Guardian: “ A handful of powerful companies control the majority market share of almost 80% of dozens of grocery items bought regularly by ordinary Americans, new analysis reveals.” https://www.theguardian.com/environment/ng-interactive/2021/jul/14/food-monopoly-meals-profits-data-investigation https://www.theguardian.com/environment/ng-interactive/2021/...

throwawaysleep 2y ago
Nowhere in the world spends a lower percentage of income on food than the USA. https://ourworldindata.org/grapher/food-expenditure-share-gdp?country=~USA https://ourworldindata.org/grapher/food-expenditure-share-gd... So I would argue that other countries, if they want to tame inflation, should allow their smaller inefficient producers to get squeezed.
- seventyone 2y ago
  This is true but people will react negatively to this data regardless. The US does have this advantage, but you can also argue that the tradeoff is our food quality is much worse than other western countries.
- myrmidon 2y ago
  That graph is misleading at best, especially for the US. If total consumer spending in the US is 50k and in Italy 20k, then it seems rather obvious to me that Americans are gonna spend a smaller fraction of that on food... If you run the numbers, those two countries spend, in fact, almost the same dollar amount on food (3.2k vs 3.5k).
- jjk166 2y ago
  Or the wealthier a nation is, the less political will exists to go after monopolies.
- Clent 2y ago
  This doesn't mean our food is cheaper. It could mean that we have other budget items that are larger than in other countries, such as healthcare costs. We almost spent more on childcare costs than countries further to the right in that graph.

boHarper 2y ago

[dead]

chasil 2y ago

Has this penetrated Aldi's, which uses in-house brands for the majority of their products? Is Aldi's a good way to avoid these monopolies? From the article, does Aldi's avoid?: - Late delivery fees from vendors (or is it better than Walmart?) - Slotting Fees - Sundry wholesaler and retailer fees - Price dependence on Tyson and other abusive suppliers

throwawaysleep 2y ago
Given that people in this thread are angry at vertical integration, I would bet that Aldi would be the first hit by many laws.
- sithadmin 2y ago
  Would depend on what exactly 'vertical integration' is defined as. Most grocers' house brand items are produced by 'white label'/contract manufacturers that supply many different grocers. It's cutting one or at best two steps from the supply chain instead of true vertical integration. HEB (the major player in the Texas market) is a notable exception that has true vertical integration, with in-house manufacturing and packaging facilities producing house brands, and its own direct relationship with raw goods/farm suppliers.
bilsbie 2y ago
I recently discovered this store. Literally seems to be half the price of my local grocery store and even more important I’m not overwhelmed with choices.
njovin 2y ago
I don't know about Aldi's but Trader Joe's (which also uses a lot of in-house brands) seems to suffer from this but to a lesser extent and with some lag compared to the competition. This is all anecdotal, but when egg prices went crazy it was several months before TJ's prices crept up (and even still they are reliably lower than major competitors). Same with meat products - for several months they're house-branded stuff was quite a bit cheaper than Vons/Albertons/Ralphs but they've slowly crept up and are now basically on-par.

jmpman 2y ago

I went to the lake last week. Before heading out, I went to the grocery store to buy some soda, an infrequent purchase in my household, and was stunned to find a 12 pack for $9.99. That was at least double the price I expected. Trying to understand where this pricing anomaly came from, I started checking out historical commodity prices. A bushel of corn for today versus 2011 - almost unchanged. Aluminum for today versus 2011 - almost unchanged. Transportation costs? West Texas Intermediate crude for today versus 2011 - almost unchanged. It’s either the caramel coloring or the water… Or the lack of competition. After I left the store, I did check their ad, and found a 12 pack of a lower tier soda for $3.50 Someone is making 60 points of margin on the $10 12 pack. That seems extreme for what is effectively corn syrup and water in an aluminum can.

cosmotic 2y ago
Brand-name soda at my local store is similarly priced but often on sale, 3 12-packs for $12 or similar (must buy 3).
- rolph 2y ago
  im accustomed to seeing this when its overstocked, it always seems to be interpreted as normal practice, rather than regular price should drop a bit.
practicemaths 2y ago
Price of branding I imagine. People are willing to pay the price so you may as well charge as much until sale revenue goes down.
- jmpman 2y ago
  I agree. The demand curve has shifted as people have the cash and aren’t willing to substitute other products.
VancouverMan 2y ago
> It’s either the caramel coloring or the water… Or the lack of competition. There could be a lot of other factors involved. Governments and unions can add a tremendous amount of artificial cost/overhead to goods and services, too. A minimum wage increase or new collective bargaining agreements, for example, can increase costs throughout a supply chain, from manufacturing, to transportation, to retail. A new or increased vehicle fuel tax, or a more general "carbon" tax, are examples of government policies that can also repeatedly distort pricing throughout a supply chain. Also, keep in mind that the pricing of the lower-tier grocery products might not reflect the actual cost to the retailer. Such products are often sold as loss leaders. The actual cost may be much closer to the cost of the higher-tier products, but this isn't apparent to the customer thanks to the retailer subsidizing the product. Cheaper grocery products can sometimes use inferior ingredients or lower-cost alternative ingredients, too. Comparisons with more expensive products may not be realistic because they're fundamentally different products, even if they may seem similar to the consumer.

chung8123 2y ago

Honestly I am always surprised how cheap food can be by mass producing it. How can pork chops cost 0.99/lbs or a whole chicken roasted but $5? I know these are sale items but I can feed myself so inexpensively and in general most of the food is pretty healthy (vegetables, some fruits, etc). These supply chains maybe squeezing profit but the likelihood a small business could even come close to the prices they have is small.

cl42 2y ago

I think this is particularly bad in Canada, where most of the brands are owned by two or three companies, and there has been clear evidence (and penalties) for price fixing. Would love to hear what Canadians think about this + if they see any innovation on the horizon.

AtlasBarfed 2y ago

Monopolies and cartels are basically the entire US economy. At this point it's basically proven to be the end state of any "free" market in the real world. Technological innovation is the only thing that truly disrupts monopolies and cartels.

swagasaurus-rex 2y ago
There’s a legal mechanism to merge companies through aquisition. There is no legal mechanism to split a company up. Even bankruptcy is case by case and doesn’t always result in a split.
- tocs3 2y ago
  I don't know but I have heard about companies spinning off smaller companies.

xrd 2y ago

Does anyone have any sources for differences by region? I live in Florida currently, and my brother visited from Oregon. He mentioned that Publix was significantly more expensive for groceries than in Oregon. Florida has a lot of retirees and vacationers, so I assume that Publix executives might say: "hey, if we bump the prices 10% in these tourist areas around Orlando, those midwestern snowbirds won't bother to shop around and will pay it without complaint. And, the German family on vacation won't know any better." If true, this would be risky, because someone could figure out what prices are radically different in different areas at the same store. Pricing is so dynamic, and these production chains are so complex, it feels like an impossible task. And, it would be fun to explore. Anyone know?

nojvek 2y ago
Publix is expensive indeed. Aldi is usually a lot cheaper than Publix and Walmart. That being said when I visited Seattle area, Fred Meyers was more expensive than publix for groceries, and Safeway was selling $50 Orchids.

DavidPeiffer 2y ago

Austin Frerick has had a number of really great interviews since launching his book. Among others: Odd Lots had him on, which is where I first heard about his work. https://podcasts.apple.com/us/podcast/the-mega-corporations-that-control-what-americans-eat/id1056200096?i=1000650703441 https://podcasts.apple.com/us/podcast/the-mega-corporations-... And an Iowa Public Radio interview https://www.iowapublicradio.org/podcast/river-to-river/2024-05-31/iowan-writes-about-corruption-in-americas-food-industry https://www.iowapublicradio.org/podcast/river-to-river/2024-...