"If you’re a craft brewer, I don't understand how this could possibly benefit you in a million years."
Benjamin Lorr, author of 'Secret Life of Groceries,' on the Kroger/Albertson's merger
Editor’s note: This bonus edition contains an interview with Benjamin Lorr, author of Secret Life of Groceries, about the proposed Kroger/Albertson’s supermarket super-merger. Because of the time-sensitivity of the news, I originally published in at the bottom of Friday’s newsletter, but because it went out so late in the day and so far down in the email, I suspect a lot of readers may not have seen it. If you did, sorry for the extra email! If you didn’t, check out the interview below. You’ll need a paid subscription to read it, and you can grab one here for 15% off. Thanks for reading!—Dave.
On Friday, Kroger and Albertson’s—the second- and fourth-largest supermarket chains in these United States—officially announced they want to merge, with the former acquiring the latter for $24.6 billion. As I wrote that afternoon:
That’s “want to” because this deal is expected receive a ton of scrutiny from the Department of Justice on anti-monopoly grounds. “There is no reason to allow two of the biggest supermarket chains in the country to merge—especially with food prices already soaring,” American Economic Liberties Project executive director Sarah Miller said in a statement Thursday, when credible rumors first emerged that the two grocery giants had reached a deal. Also Thursday: the Bureau of Labor Statistics released its monthly Consumer Pricing Index, which showed grocery price inflation at a staggering 13% compared to this time last year. Very cool!
Your fearless Fingers editor is no grocery expert, but because supermarket chains are the largest retail channel for beer sales by far, I’m always trying to get smarter about it. Benjamin Lorr’s 2020 book The Secret Life of Groceries is indispensable in that effort: it’s a hilarious, incisive page-turner that lays out how much power the supermarket system has over, like, everything. I can’t recommend it highly enough. I interviewed Lorr last year at length about his book, and with the Kroger x Albertson’s proposal still fresh, I called him up again to get his take on its potential effects on the American supermarket system overall, and the people who rely on it for paychecks and sustenance in particular.
The upshot? “It’s a bad deal for consumers and workers, and a great deal for a new behemoth,” Lorr tells Fingers. “They get to hammer suppliers, set national floors on things like slotting fees, and be a more powerful negotiator against unions — and I doubt any of that leverage will turn into lower prices in an inflationary environment with one less competitor.”
Journalist Benjamin Lorr on the proposed Kroger/Albertson’s deal
Dave Infante, Fingers: Benjamin, thanks for getting on the phone. Let’s talk about this merger, man.
Benjamin Lorr, journalist and author of Secret Life of Groceries: Yeah, thanks for calling. I mean, it’s basically a bummer for the consumer. Consolidation is going to lead to a much more aggressive posture towards [Kroger/Albertson’s] suppliers, and they're going to be able to negotiate better deals, which, you know, would seem like it could lead to lower prices for consumers. But because there's going to be less overall competition, and because we're in an inflationary environment….