What the Kroger deal means for growers & brands

2-min read

This is my 100th post! I started writing this newsletter 100 newsletters ago to help you – the growers, manufacturers, and brands in the food industry – make better decisions in the business of food. And two years in, there is more than ever to share. This industry keeps changing, and the good news is there is opportunity everywhere.

Kroger’s recent news is an example.

Kroger, the nation’s second largest grocer, announced it’s buying Albertsons (includes Safeway, an Albertson banner), which is going to be good for many of you: from the small-mid size farms near metro areas, to private label manufacturers looking to diversify, to emerging brands looking to scale.

That’s because from the supply side, the Kroger deal accelerates distributed supply chains on a national scale – so if you farm just outside a city, Kroger has said they will invest in more direct supplier relationships to bring farm fresh products to their stores. These are our nation’s most vulnerable farms, so the sooner Kroger acts, the better to keep farms, many family-owned, running and profitable.

Second, Kroger announced they want to boost their private label offerings – to 34K products – which necessitates innovation and contracted volumes for manufacturers. Kroger wants the top trending items in every category as a private label, so if this is you, here’s an opportunity to close in on capacity gaps in your facility and become more efficient.  If you’re a brand who doesn’t have a direct label competitor now, watch out.

Kroger’s mega-strength as a 4000+ retailer will definitely put a squeeze on national brands and make it harder for small brands to enter. Going national with a behemoth is expensive, and makes things like price negotiation more difficult. But in order for this deal to go through, Kroger is likely to divest 350 – 450 stores, which is good news for growing brands not yet distributed nationally. These divested stores will be spun off creating a lower cost of entry opportunity, giving emerging brands more runway before committing to going national with the new mega-grocer.

It’s possible the Kroger deal won’t pass anti-trust regulators, but I’m for it if for nothing else, Kroger will improve the customer experience which is wanting at Safeway/Albertsons, imho. I’m also a fan of their insights and owned data analytics company 84.51 that gives brands tons of intel.

For 100 posts, I’ve been delivering practical advice to startups and ag supported CPG for the purpose of fostering mutual value creation. In the coming months, I’ll be writing on topics such as how to get funded at the early stages, direct to farm premiums, what the food waste trend means for you, what startups need to know about food safety, a more promising way to keep farmland in the family … and much, much more.

Thanks for reading and I look forward to the next 100.

All my best,

Jennifer

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