THE FRIDAY 5: Kroger Not Backing Down; Massive Acquisition in Snacking World
Welcome to The Friday 5, Progressive Grocer’s weekly roundup of the top news and trends in the food retail industry. Each Friday, we’ll take a look at the stories that are most important to our readers and also keep tabs on the trends that are poised to impact grocers.
1. Kroger’s Legal Dealings Dominate the News
The Kroger Co. has dominated the news recently, and shows no signs of slowing down. This week, U.S. Senators Elizabeth Warren (D-Mass.) and Robert P. Casey, Jr. (D-Pa.) sent a letter to Kroger Chairman and CEO Rodney McMullen questioning the retailer’s use of electronic shelf labels.
Warren and Casey expressed concerns about what they deemed dynamic pricing from Kroger and other American grocers. “Widespread adoption of digital price tags appears poised to enable large grocery stores to squeeze consumers to increase profits,” they wrote. The politicians also sounded a cautionary note about “sensitive consumer data,” through the use of cameras on ESLs displays.
Kroger maintains that its pricing methods are ultimately shopper-centric and can benefit the overall market in a number of ways. “Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true,” said a company spokesperson.
In other legal news this week, Kroger is pushing back against the Federal Trade Commission’s motion for a preliminary injunction against its proposed $24.6 billion merger with Albertsons Cos. The FTC is seeking “extraordinary relief” to stop the companies from proceeding with their planned tie-up, but according to Kroger, the organization has failed to satisfy its burden to show that an injunction is permissible or warranted.
In a response to the FTC’s challenge, Kroger stated that it must “expand, adapt, and most importantly, continue to lower prices to compete with global behemoths. Simply put, modern competition for groceries and ‘household goods’ extends far beyond Kroger and Albertsons, and Kroger must embrace this reality to compete effectively and offer consumers the lowest possible prices, while offering better paid jobs to union workers.”
Kroger addressed cost concerns by doubling its proposed price cuts upon the completion of the merger, according to a report from Bloomberg.
Finally, readers were interested in news of a Chicago judge dismissing a lawsuit brought against Kroger regarding its use of the phrase “farm fresh” to describe its eggs that were produced in an industrial environment. U.S. District Judge Charles Kocoras ruled that the grocer’s use of the phrase was indeed not misleading to reasonable consumers.
2. Mars Plans to Acquire Kellanova
It turns out the rumors about an acquisition from Mars Inc. were true. Family-owned Mars, a global leader in pet care, snacking and food, said this week that it plans to acquire Kellanova, a top company in worldwide snacking, international cereal and noodles, North American plant-based foods, and frozen breakfast foods.
The companies have entered into a definitive agreement under which Mars will buy Kellanova for $83.50 per share in cash, for a total consideration of $35.9 billion, including assumed net leverage. According to the companies, this is the largest acquisition of 2024 to date, while analysts described it as the largest CPG transaction since the merger between Kraft and H.J. Heinz in 2015.
Once the transaction is complete, Kellanova will become part of Mars Snacking, headed by Global President Andrew Clarke and based in Chicago. Battle Creek, Mich. – the historic hometown of Kellogg’s brands – will remain a core location for the combined organization.
3. Two Sides of Trader Joe’s Employees
Trader Joe’s was in the news this week for two very different reasons. The company has long put its employees front and center in more ways than one, from promoting fun work attire to setting the tone for team members to engage with shoppers at checkout. The latest episode of the Inside Trader Joe's podcast delved into its talent culture and how the retailer's brick-and-mortar expansions are as much about widening the pool of people as they are about building physical stores.
As co-host and TVP of Marketing Matt Sloan put it: “What really matters is the development and the growth of the people in them, the crew, because they are what make those stores feel like a Trader Joe's.”
Unionized Trader Joe’s employees in Massachusetts, however, are less than thrilled with their current positions. Associates at the Hadley, Mass., store location have submitted a petition seeking a workplace election to remove the Trader Joe’s United union. The Hadley store created a lot of buzz as the first unionized Trader Joe’s when it voted to form Trader Joe’s United in July 2022.
“Officials of this union have sowed division and smeared both our workplace and anyone who dissents from the union’s agenda pretty much from the time the campaign began to unionize the store,” noted Trader Joe’s employee Les Stratford. “This isn’t what I believe the majority of my coworkers want or deserve, and despite the union’s pushback on this effort, we will fight to ensure that our colleagues can exercise their right to vote on whether we want to be represented by this union.”
4. The Gamification of Grocery
Grocery gaming culture piqued reader interest this week, with new insights from Datassential highlighting partnerships for promotional growth. During a recent webinar recapping that report’s findings, Datassential’s Jaclyn Marks cited data showing that 61% of consumers currently play video games on their phones or TVs and 45% of consumers who play video games have been influenced to make a food or beverage purchase because of video game-related content or ads. Those percentages are even higher among younger Gen Z and Millennial consumers.
“This is an industry that you may want to take into consideration as you are doing product planning,” advised Marks, noting that the video game sector is a bigger moneymaker than the global food and sports industries combined.
5. New Store Openings From Target, Sprouts, T&T Supermarkets
New store announcements from several grocers, including Target, Sprouts Farmers Market and Canada-based T&T Supermarkets, dominated headlines. Already on a roll with new store openings this year, Target has revealed four new locations that are set to come online on Aug. 18, including two in Florida, one in South Carolina and another in Texas.
Sprouts Farmers Market, meanwhile, opened two new locations on Aug. 9, including one in Lawndale, Calif., and one across the country in Brooksville, Fla. The fast-growing retailer is on track to add 35 locations by the end of the fiscal year.
Finally, Canadian Asian grocery retailer T&T Supermarket revealed plans to open its first store in California at Westgate Center in San Jose in the fall of 2025. With two stores already in the pipeline in Washington state, T&T now has three stores slated to open in the United States.