Who Owns Your Grocery Store?

In the age of monolithic grocery giants, food co-ops offer a promising alternative.

Reprinted & abridged with permission from Jon Steinman's July 28, 2017 article in Canada's The Tyee

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Jon Steinman just ran a successful (hooray!) crowdfunding campaign to support the development of the book Grocery Story – The Promise of Food Co-ops in the Age of Grocery Giants. Jon is also the writer and host of the Deconstructing Dinner television and radio series.

Who owns the grocery store you shop at? I love this question. It’s an important one, an entry-point into what type of food system we choose to invest in each time we pass through the grocery checkout. If you’re like most, your investment is probably not so much a choice, but an exercise in necessity, habit, or convenience. Most of us, after all, are sorely limited in choosing which among the grocery giants our food dollars will support.

The national market share of Canadians’ grocery dollars is telling, with over 80% of Canada’s grocery dollars ending up in the pockets of only five companies. In Vancouver, if you shopped at the once-locally-owned Capers Markets, your food dollars in the past 10 years have been an investment in Whole Foods. If the recent $13.7-billion acquisition of Whole Foods is approved, you’ll soon become an investor in the Amazon empire.

This eroding of competition among the grocery giants also mimics the (un)competitive landscape of the foods found on their shelves. In their “Grocery Goliaths” report, U.S. NGO Food & Water Watch refers to the companies supplying the stores as the “Monolithic Food Manufacturers.” Indeed they are. Today, two companies hold 99% of the sports drink market, and three companies retain 96% of the market for baby formula, 80% for granola bars, and 77% for ketchup. In a third of the categories researched, the report found four or fewer companies control at least 75% of sales. The figures are almost Orwellian. How have these monolithic manufacturers amassed such concentration? Simple. They pay for it.

Food manufacturers across the globe are shelling out $50 billion a year in trade fees and discounts – requirements established by the grocery giants. In the U.S. alone, these “trade fees” have been estimated at $18 billion. The deeper the pockets of the manufacturer, the better the chance that the grocery gatekeepers will grant the manufacturer access to the eating public.

Perhaps the most dubious of the fees are the slotting fees, where a manufacturer pays the retailer to place their product on their shelves.

Once there, the retailers provide little guarantee that the product will remain. To assure long-term placement, manufacturers shell out a “pay-to-stay” fee.

It matters little to the retailer if the product is unhealthy, lacks innovation, or carries a heavy environmental footprint – the foods on standard grocery store shelves are reserved for the highest bidders. As one report on slotting fees writes, “Supermarkets today are as much about selling shelves to food companies as they are about selling food to customers.”

An article in the Economist captures it best: “So lucrative have slotting fees become, that industry insiders joke that supermarket shelves are now the world’s most expensive property.”

 

So what’s wrong with this eroding of competition in the marketplace?

For me, it’s the impact the hollowing out of options has on my local economy and how

it prevents the local food butchers, bakers, and kombucha-makers from accessing the shelves of local and regional stores.

These good-food innovators deserve access to the marketplace. They are the entrepreneurs who are transforming the food supply, but they are no match for the flexed muscle of a new flavor of Doritos.

In my hometown of Nelson, B.C., any investment in the three largest grocery stores results in my community lining the pockets of the second, fourth, and 21st richest Canadians. Not surprisingly, none of these grocery tycoons live anywhere close to Nelson.

Why do we allow our local economy to be controlled remotely by a handful of companies run by people who would likely struggle to even find us on a map?

Grocery Story Kickstarter

So what are we to do?

The history books are full of examples of efforts to combat the concentration of wealth and power within the grocery sector. By 1934 in the U.S., the groundswell of resistance to the rise of chain stores resulted in 17 states implementing chain store taxes. In the grocery sector, much was in response to the spread of the largest of the grocery giants, A&P, who had assumed 16.7% of the American grocery market. Despite intense opposition to it, anti-trust legislation succeeded in holding back mergers and preventing the demise of many locally owned food-based businesses. By the early 1980s, these agencies and their requisite powers were severely eroded, their powers reserved for only the most egregious of anti-competitive activity. The great mergers of the 1980s and '90s ensued.

The resistance among consumers was not, however, extinguished. One of the most under- appreciated responses to this concentration of wealth and power were the hundreds of communities that organized to take back control of their local economies and food supply. They did this by forming food buying groups and retail food co-ops. The first wave of these consumer-owned stores emerged in the Depression era, but it wasn’t until the early 1970s [1971 for New Pi!] and a new wave of community-owned grocery stores did the inspiring food co-op movement of today really take shape.

Here in Nelson, I’m a member-owner of the Kootenay Co-op. Like at any consumer co-op, once a year I gather with my fellow co-owners to elect a group from among our 14,000+ members to lead the store on our behalf [Use your ballot on p. 16-17 here to do just that!]. When I have a question or concern about an existing product or a request for an item, my grocery store listens with earnest attention. I know the names of most of the people who work in the store and I recognize half of the shoppers. Last year, the Kootenay Co-op purchased $3.5 million in products from local suppliers, and I’m not referring to the appropriated version of “local” used by the chain stores. The same energy and social engagement that attracts me to the busy farmers’ markets is the same incentive that draws me into my grocery store. My grocery store is my community.

Not surprisingly, the hundreds of natural food co-ops in North America, which, for years had easily differentiated themselves from their conventional counterparts, are today facing new pressures from the national and multinational chains, not to mention the recent emergence of regional chains specializing in foods that were once characteristically “co-op.” The fear among co-ops of this new competition is palpable, but there are quite a few characteristics of food co- ops that conventional stores will never match.

Food co-ops are democratic: Any member-owner of the co-op can run for the board of directors and all members are invited to vote for their board each year.

Local head-office: The entire management team running a food co-op is local. No one is calling the shots from Toronto, Nova Scotia, or Arkansas. In turn, cooperative grocery stores employ more people than privately owned ones.

Profits remain with the co-op: Any profits generated by a food co-op are re-invested back into the co-op and/or distributed equitably among member-owners.

If you hear anyone alleging that a food co-op is gouging its members, it's simply not possible.

The financial success of the co-op benefits the entire membership and co-ops are in the business of providing the best prices to their members while ensuring their suppliers are fairly compensated and the products carry the least environmental impact.

More immune to takeovers: Amazon’s pending acquisition of Whole Foods is a reminder of the risk inherent in relying on privately owned grocery stores. Indeed, Whole Foods is no mom-and-pop retailer, but a takeover of their store(s) by the hungry giants
is not a decision that requires approval of the store’s shoppers, as is the case with a food co-op.

A first critical step is to support the shift within the collective conscience of eaters of how we perceive the existing grocery stores operating in our neighborhoods. Just like the buying groups of the '70s, it’s likely necessary for each of us to first arrive at that place of being downright fed-up with the companies currently feeding us. Then the work can really begin toward democratizing our local economy and democratizing our grocery stores.

 

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