California lawmaker launches bill to highlight healthier foods in grocery stores

A California bill would give non-ultraprocessed food a seal and 
premium placement on grocery store shelves. (Unsplash photo)

A California lawmaker is promoting a bill that would give non-ultraprocessed foods a “California Certified” seal of approval and premium grocery shelf space to help educate consumers about which foods are the healthiest, report Nicole Norman and Rachel Bluth of Politico. "The legislation is the latest in a broader war on unhealthy food."

On a federal level, the Food and Drug Administration and USDA continue to tease out a national definition for ultraprocessed food. But California lawmakers created their own ultraprocessed food definition in October 2025, which labels ultraprocessed food as "any food or beverage that contains flavor or color enhancers and that is high in saturated fats, sodium or specific added sugars or sweeteners," Norman and Bluth write.

Educating American consumers about the health risks of ultraprocessed foods and removing them from the national diet are "both popular and bipartisan," Politico reports. "It’s a cause popularized at the federal level by Health and Human Services Secretary Robert F. Kennedy Jr. and his Make America Healthy Again movement."

Unsurprisingly, companies that make ultraprocessed foods are ramping up their opposition to new laws that decrease their market share of U.S. grocery budgets. Norman and Bluth write, "National manufacturers argue that regulatory burdens drive up the price for consumers and that state regulations on ingredients 'risk undermining the system.'"

California's approach, which labels healthy food, is a new twist on the labeling ultraprocessed food debate. Over the past decade, Latin countries have passed laws that require "warning" labels or color-coded nutritional labels on the front of boxes or wrappers. 

In 2024, the FDA began considering requiring food labels that "might flag certain health risks, such as high levels of salt, sugar or saturated fat," The Wall Street Journal reports. According to its website, the FDA is currently "proposing a rule that would require a front-of-package (FOP) nutrition label on most packaged foods to provide accessible, at-a-glance information to help consumers quickly and easily identify how foods can be part of a healthy diet."

Mexican produce suppliers and U.S. grocers tap dance around tariffs to keep aisles stocked and prices steady

Trade with Mexico keeps fresh produce on American
grocery store shelves. (Adobe Stock photo)

Supermarket produce aisles are suffering from a bad case of tariff whiplash, leaving suppliers juggling orders to avoid levies and grocers searching for ways to hold costs down. "Companies that import and distribute tomatoes, broccoli and other fruits and vegetables are canceling orders and sometimes replacing them within days," reports Patrick Thomas of The Wall Street Journal. "Supermarkets and retailers are monitoring consumers’ tolerance for higher prices. . . and considering bigger changes in their supply chains."

The Trump administration's see-saw approach to tariffs is "becoming a day-to-day factor for businesses that rely on cross-border commerce," Thomas writes. "American consumers expect to see fresh produce in stores year-round, and for avocados, broccoli, peppers and mangos, that means buying from Mexico and South American countries."

Despite the scale of Mexican produce sales to the United States -- worth roughly $20 billion annually -- suppliers operate with razor-thin profits, which leaves "little room for sellers to absorb higher costs without passing them along to customers," Thomas explains. "That leaves retailers and suppliers to determine whether consumers can stomach still-higher prices after inflation fatigue has eroded sales at supermarkets and restaurants over the past year."

To hold prices steady, grocers are reworking their supply chains. "Grocery giant Kroger said it is attempting to shift its purchasing of produce and other products to avoid the Trump administration’s tariffs, and ward off further price increases in its stores," Thomas reports. California grocer, Dynasty Farms is "considering moving its broccoli production to the U.S., where the company operates farms from California’s Salinas Valley to Scottsdale, Ariz."

Kroger-Albertsons merger blocked by judge who sided with Federal Trade Commission's anti-trust argument

The merger would have 'nearly doubled Kroger's
store count.' (Kroger and Albertsons graphics)

The planned $20 billion merger between Kroger and Albertsons was blocked by a federal judge who "agreed with the Federal Trade Commission’s argument that Kroger would become the dominant player in traditional supermarkets if allowed to add nearly 2,000 stores by taking over Albertsons," report Dave Michaels and Patrick Thomas of The Wall Street Journal. U.S. District Judge Adrienne Nelson "rejected the companies’ counterargument that selling 579 stores to C&S Wholesale Grocers would replace the lost competition."

The ruling is a victory for FTC Chair Lina Khan, "who has waged legal battles to stop megadeals rather than accept companies’ proposed fixes to address competition concerns," Michaels and Thomas write. Kroger and Albertsons executives marketed the deal as a necessary move to compete with Walmart and Amazon.

Nelson's ruling cited the fierce "head-to-head competition" between Kroger and Albertsons, which the proposed merger "would have removed." Michaels and Thomas write, "An FTC spokesman said the ruling 'protects competition in the grocery market, which will prevent prices from rising even more.'"

If the deal had succeeded, Kroger's store count would have almost doubled, "exceeding the scale of Walmart’s 3,500 supercenters," Michaels and Thomas add. "Rodney McMullen, Kroger’s longtime chief executive, had pledged to eventually invest $1 billion annually in lowering prices at the acquired Albertsons stores. . . . FTC attorneys argued the deal would only give Kroger a reason to increase prices by removing a competitor." 

Earlier in the year, Albertsons CEO Vivek Sankaran told a federal court that "if Albertsons’s sale to Kroger was blocked, the supermarket chain would consider closing stores or laying off workers," the Journal reports. "He said that while the company’s business is sound for now, in the next two to three years it could need to find another buyer."

Smaller food makers and independent grocers bear brunt of distributors' fees. Bigger grocery stores have the advantage.

Unraveling why some grocery prices are high means
looking at little-known fees. (Adobe Stock photo)

 

As Americans continue to face stubbornly high grocery prices, many are searching for root causes. Turns out, mysterious add-on fees might be part of the problem. "The price of a bag of coconut-cashew granola jumped last year from $5.99 to $6.69," reports Jesse Newman of The Wall Street Journal. "The granola maker said the cost of making the cereal hasn’t gone up that much. . . It jacked up the price, it said, in large part to offset fees that piled up from a little-known link in the supply chain: grocery distributors."

Since the pandemic, bigger grocery chains have raised prices citing supply chain woes, high labor costs and ingredient price hikes. Newman explains, "Many small manufacturers that have raised their prices have another explanation. They say they also are being squeezed by the distributors who act as gatekeepers to many supermarkets."

Avoiding grocery store middlemen isn't easy for smaller food makers. George Milton, who runs a hot sauce business in Austin, Texas, used to deliver his product himself, but that model is no longer realistic. Newman reports. "These days, the chief executive of Yellowbird Foods relies on national distributors to ship his product to stores, a process he said is riddled with obscure costs that make it hard to know what, if anything, he’ll be paid." Milton told Newman, "That’s a really tough way to run a business. But what is the alternative, that I UPS it from one place to another?”

While distributors may look like the problem, it's not easy for them to make a profit either. "Distributors operate on razor-thin profit margins, with limited ability to offset rising operating costs," Newman writes. "The situation reflects a struggle for profit throughout the grocery sector. Big food manufacturers that account for the bulk of sales have pushed through hefty price increases and notched some of their biggest profits in years."

Distributor fees can harm independent grocery stores because larger chains can buy inventory directly and negotiate lower distribution fees. "Distributors’ rules and charges are a symptom of pressures rippling through the supply chain," Newman explains. "Grocers are competing with one another to win shoppers with lower prices. Big food sellers have gained market share, giving them more leverage in negotiations with distributors."

Grocery store chains still use 'old-school' spying to out-price competitors. The practice has piqued antitrust interests.

Kroger ads provide competitors price information, but
"spies" also visit stores in person.

When big grocery stores battle for market share, most chains deploy old-timey spies who sleuth prices, quality and customer behaviors. The "old-school tactics are fueling the government’s case against Kroger-Albertsons deal," reports Patrick Thomas of The Wall Street Journal. "Grocery-store operators scrutinize the websites and promotions of rivals and send managers to walk through competitors’ stores to help establish what shoppers will pay for items."

In the case of the proposed $20 billion merger between Kroger and Albertsons, how grocery stores compete matters. Government antitrust lawyers seek to block the merger because grocery companies "commonly use rivals’ prices as a benchmark in setting their own," Thomas explains. "Federal Trade Commission attorneys argued that Kroger won’t have the same incentive to lower prices in its stores without Albertsons. Price checks can provide a ceiling for what grocers charge shoppers."

While antitrust lawyers say competition between big grocery store chains helps keep prices down, attorneys for Kroger say merging with Albertsons will enable them to compete with Walmart. Thomas adds, "Kroger and Albertsons also said they price check against a number of different competitors in a given area, including Walmart, Target, and Amazon.com’s Whole Foods Market, not just each other."

Still, the active competition between grocers demonstrates how prices can be affected by grocery store sleuthing. James McCann, the former chief executive of grocery chain Ahold USA, told Thomas, "It’s about the perception of price in your store. If you are expensive, a lot of customers will migrate to other places." Thomas reports, "McCann said it is common to send an employee across the street to a competitor three times a week to check prices on about 30 items."

Even though Walmart is the world's largest retailer, it also uses old-school spying to gain market knowledge, and in turn, the company uses that on-the-ground information to squeeze cheaper prices out of suppliers. Thomas adds, "The retailer also has regional managers visit competitors and its buyers pressure suppliers to offer lower wholesale prices if managers find items sold cheaper elsewhere, people familiar with the process said."

Coffee prices continue to spike as global demand grows and supplies lag; China is driving increases

Due to steep price increases, Americans are buying less coffee.
(Adobe Stock photo)

In what many would describe as a total buzzkill, coffee prices are increasing around the globe. "Since January 2021, U.S. coffee importers – which supply 99.6% of the coffee consumed in the U.S. have faced escalating costs for the commodity. Import prices jumped 65% between 2021-23, making a serious impact on consumer prices," reports Billy Roberts for CoBank. U.S. consumers have responded to the steep increases by purchasing fewer beans. Ground coffee sales volumes have declined 10.1% since 2022 and 15.7% since 2021.

While U.S. and European coffee sales remained level through the pandemic years and are now stagnant or dipping, world consumption has steadily increased. "Consumption in Asian countries has jumped 14.5% since 2018, as coffee has become a much more common beverage choice," Roberts explains. "China is playing the lead role in driving the world's coffee demand growth. Servings in China were up 15% Year-over-Year as of May 1 . . .  according to Circana."

Producers would usually welcome an increase in worldwide coffee drinkers, but many continue to deal with supply-line challenges and lower yields. "Droughts, frost and fires in Brazil have damaged as much as one-fifth of arabica coffee producers' growing areas, and frost and below-average rainfall continues to hamper progress," Robert reports. "Colombia has yet to fully recover its pre-Covid share of U.S. exports. . . . Colombian coffee yields continue to trend lower, likely the result of growers opting to limit fertilizer as its price spiked."

Considering demand increases and lagging supplies, coffee prices are expected to remain volatile. "The Bureau of Labor Statistics data find prices for U.S. imports of coffee fell 2.6% from May 2022 to May 2023. Yet, even with the drop, U.S. prices remained substantially ahead of their 2021 levels: 57% higher in May 2023 than in May 2021," Roberts notes. "Global crop concerns have pushed up prices of both arabica and robusta (the two major types of coffee Americans consume)."

Faced with ballooning grocery bills, many Americans have switched from national to private-label brands

Americans are still trying to find ways to combat
grocery store sticker shock. (Adobe Stock photo)

As Americans continue to battle their ever-increasing grocery store bills, some are cutting brand-name products and picking up lower-priced store brands, which are surging in popularity. "U.S. consumers are trying many tactics to cut their food spending: eating out less, buying less groceries and ditching name brands," report Jesse Newman and Stephanie Stamm of The Wall Street Journal. "That is boosting lower-cost store brands, which last year claimed 22 cents out of every dollar spent in grocery stores — the largest share ever for so-called private-label products."

While national brands still dominate the U.S. sales market, store brands made by companies such as TreeHouse Foods for Walmart and Kroger "are gaining ground, raising pressure on big food companies that have pushed their prices higher," Newman and Stamm write. "Sixty-five percent of shoppers say they choose private label over national brands because of store brands’ lower price, according to a Food Industry Association survey."

Over time, store brands have improved in quality, with some retailers expanding brand offerings. "Walmart, which owns the Great Value brand, is introducing a line of premium food called Bettergoods this year, with many items priced below $5," the Journal reports. "In many cases, retailers’ goal now isn’t just to emulate national brands, but to beat them, analysts said."

As inflation continues to reduce U.S. consumer spending power, the industry is leaning on store brands to increase sales. "More than half of retailers expect private-label goods to be their top driver of growth this year, according to a survey by NielsenIQ. Grocers that primarily offer store brands, such as Trader Joe’s and Aldi, are seeing more foot traffic in recent months," Newman and Stamm write. "Consumers’ views on private labels are improving, with millennials and Gen Z leading the pack, according to NIQ."

When dollar stores open in rural places, local independent grocers take more of a hit than their urban counterparts

Rural groceries are less likely to survive a dollar store opening.
(USDA graphic)

The local grocery has long been an important fixture in small-town life. But as dollar stores have popped up across the country, rural grocers have had a more difficult time staying open than their urban counterparts, report Keenan Marchesi, Sandro Steinbach, and Rigoberto A. Lopez for Amber Waves. "In 2015, independent grocers represented about half of the food retailers in 44 percent of U.S. counties. Leading up to 2015, however, dollar stores were becoming increasingly visible in rural counties, according to the USDA Economic Research Service research."

Researchers analyzed data from urban and rural grocers from 2000 to 2019 to determine how a new dollar store's entry affected independent grocery stores. Amber Waves reports, "Results showed that when a dollar store opened in a census tract [rural or urban], independent grocery retailers were 2.3% more likely, on average, to exit the market. Employment at independent grocery stores fell about 3.7%, and sales declined by 5.7%"

ERS chart

The data revealed a contrast in the economic impact of a dollar store opening in a rural area compared to an urban one. "For instance, the likelihood of an independent grocery store exiting a rural census tract after a new dollar store opened was 5%, about three times greater than in urban census tracts," Marchesi, Steinbach and Lopez explain. "Similarly, the decline in employment in rural tracts was about 2.5 times as large as in urban tracts, and the decline in sales was nearly double in rural census tracts."

The research also showed that a rural independent grocery store was less likely to rebound from the negative financial impact caused by a dollar store opening. By contrast, urban independent grocers were able to weather a dollar store's entry. Amber Waves reports, "This could reduce grocery store options in rural areas for the longer term. Dollar stores generally have a more limited selection of food products, focusing more on prepacked and processed foods." When a local rural grocery closes and doesn't return, residents' access to fresher, healthier food will at least in part be decided by what dollar stores choose to stock, which could ultimately hurt a community's overall health.

Produce is getting a makeover: Branded veggies and fruit hit grocery store shelves and e-commerce sites

Even apples were sent to the 'stylist's chair.'
(Yes! Apples photo via The Wall Street Journal)

What's better than the most perfectly shaped, webbed, orange-spotted fresh watermelon? The same watermelon in splashy packaging. "More farmers and produce companies are now moving to a business model they've seen work in other product categories: differentiate even the plainest products with fun packaging and an interesting back story, gain customers' loyalty and sell more units at higher margins," reports Katie Deighton of The Wall Street Journal. "Branding the previously unbranded helps companies use marketing tools that had been unavailable."

Is it possible to pick out bananas and look trendy? Maybe. Across the United States, branded fruits and veggies are popping up on e-commerce sites and grocery store shelves wrapped in fresh marketing designs that "promote their provenance and sustainable credentials," Deighton writes. Previously, most fruits and veggies were marketed based on price and quality.

This shift has occurred partly because Americans started taking a closer look at where their groceries came from, particularly in the produce aisles. Online grocery sales also increased, as "buyers can't examine the products in person, making brand names a more useful signal of consistency," Deighton reports.

"[Shoppers] also showed a growing tendency to shell out for cool food brands that say something about their lifestyles and tastes, even during a time of food price sensitivity."

So far, produce marketing is growing more slowly than other sectors because its product changes from year to year. Michael Perdigao, president of advertising and corporate communications for the Wonderful Company, told Deighton, "We don't know from year to year how big the crop is going to be. We may have committed to a media buy or bought in the upfront market or something and then don't need it."

Grocery prices weigh heavily on American minds; executives say 'shoppers will adjust.' Can they afford to?

$100 doesn't stretch near as far as it used to.
(Photo by G. Tovato, Unsplash)

When it comes to minimalist designs, less might be more. But when it comes to American wallets, less is just less. "Prices for hundreds of grocery items have increased more than 50% since 2019 as food companies raised their prices. Executives have said that higher prices were needed to offset their own rising costs for ingredients, transportation and labor," report Stephanie Stamm and Jesse Newman of The Wall Street Journal. "Some U.S. lawmakers and the Biden administration have criticized food companies for using tactics such as shrinkflation, in which companies shrink their products — but not their prices." As grocery costs have risen, so has consumer ire, and some food producers are starting to make changes and offer more deals. 

Instead of anger, some consumers have opted for a more creative response to hikes. Stamm and Newman write, "Sharon Faelten, a 74-year-old retiree from Underhill, Vt., said that instead of a wallet-punishing ordeal, she tries to think of trips to the store like procurement raids depicted in apocalyptic novels, where the goal is to stock her fridge, freezer and pantry for as little money as possible.

The fact that $100 doesn't go nearly as far as it used to makes some citizens more pessimistic about the country's overall economy. "Millions of U.S. households were flush with cash during the pandemic, thanks to stimulus checks, fatter unemployment checks and the expanded Child Tax Credit," reports Aimee Picchi of CBS News. In 2024, most pandemic cash has been spent, inflation is up and affordable housing can be difficult to find. However, the Journal reports, "The price of food and household staples continues to weigh heavier on consumers’ minds than other economic concerns."

Are prices continuing to climb? Yes, but much more slowly. "Grocery prices were up 1% in February from a year earlier, Labor Department data show," the Journal reports. "They were up 10.2% in February 2023 versus a year earlier, and were up 1.2% in February 2019 from a year earlier." In all, Stamm and Newman found that what cost a family $100.03 in 2019 now costs $136.89 . . . . "Some food-company executives have said that shoppers will adjust over time to higher prices, as they have in the past."

Rural residents often have limited retail choices for groceries and staples; when dollar stores close, they have even less

In some small towns, dollar stores add grocery and staple options in remote areas with few or no alternatives. In other cases, dollar stores were built right next to the local grocery store, slowly chipping away profits and eventually closing the local business. In both scenarios, rural residents rely on dollar stores for affordable staples. When they close, rural people have fewer options.

"Even though inflation is cooling, prices are still higher than they were pre-pandemic. They've hit low-income consumers the hardest, which is why many shop at dollar stores," report Bianca Facchinei and Emily Grossberg of Scripps News. "Dollar stores aren't just about saving money; sometimes, they're the only option." Consumer Reports deputy editor Brian Vines told Scripps News, "So many smaller mom-and-pop and independent stores have had to shutter because of competition from dollar stores, and those very communities now are faced with the very real threat of having no retail."

Last week, Dollar Tree said, "It plans to close 600 underperforming Family Dollar locations between now and June," Facchinei and Grossberg add. "An additional 370 Family Dollar and 30 Dollar Tree stores will close at the end of each store's current lease term."

Vines hopes the closures may offer opportunities for new growth. Vines told Scripps: "We're thinking about independent grocery stores or other folks who can really provide robust offerings. They see fertile ground now that those value retailers who've undercut them in the past aren't operating in the space."

Larger retailers used their dominance to push suppliers and squeeze competitors during pandemic, FTC report shows

Larger retailers used the pandemic to 'come
out ahead.' (Photo by S. Lee, Unsplash)

American grocery prices remain usually high, and many smaller-scale grocers still struggle to recover from pandemic setbacks. A new Federal Trade Commission report sheds some light on how larger retailers used their power to push suppliers to deliver to them first, which caused more struggles for smaller competitors and may be partially to blame for why grocery costs have remained high even as overall inflation has cooled.

"Federal regulators said large grocery chains used their size and scale to keep shelves stocked during the pandemic, edging out smaller rivals when most stores struggled with product shortages and distribution bottlenecks," reports Liz Young of The Wall Street Journal. Many larger retailers put "stricter delivery requirements into place and fined vendors that didn't comply. . . The demands led many suppliers to route more goods toward those retailers to avoid the fines."

FTC Chair Lina Khan told the Journal, "Dominant firms used this moment to come out ahead at the expense of their competitors and the communities they serve." Young reports, "The agency said revenue growth at grocers outpaced the cost increases many of them faced from suppliers, suggesting that higher profits 'warrant further inquiry by the commission and policymakers.'"

While supply bottlenecks thwarted smaller grocers during the pandemic, "Some of the largest U.S. retailers, including Walmart, Home Depot, Costco and Target, chartered their own cargo ships in 2021 to import goods and get around the chokepoints," Young writes. "Small grocers say the pandemic exacerbated their longtime struggles to compete with bigger retailers." Robert Buche, chief executive of South Dakota grocery chain G.F. Buche, told Young, "Covid just made it more obvious what's been happening for years with us independents."

Hanging on to the local grocery store is important to rural residents and economies

Brian Horak at Post 60 Market in Nebraska.
(Photo by Kevin Hardy, Stateline)

What knits small towns together? Schools and the local newspaper may come to mind, as does the local grocery store, which many smaller communities are working to save. "Preserving grocery stores has been a perennial challenge for rural communities. Small, often declining populations make it tough to turn a profit in an industry known for its razor-thin margins," reports Kevin Hardy of Stateline. "Increased competition from online retailers. . . have only made things tougher."

Community involvement and investment, however, are working to give some local grocery stores a fighting chance. In Emerson, Nebraska, pop. 824, Post 60 Market "opened four years after the closure of the town’s only grocery store," Hardy writes. "Some 110 community members bought shares, which funded the transformation of a shuttered American Legion post into a brightly lit store packed with fresh and packaged foods."

Proposed legislation in Nebraska aims to "provide some relief for stores like Post 60 Market," Hardy reports. "If passed, the new law would provide grants and loans for small grocers. In neighboring Kansas and Iowa, lawmakers have introduced bills with similar goals, following the lead of states — including Illinois, Minnesota, North Dakota and Oklahoma — that have enacted laws setting up special funds to boost rural grocery stores."

Jillian Linster, interim policy director at the nonprofit Center for Rural Affairs, told Hardy, "After the pandemic, we have seen a lot of these local grocery stores just struggling to keep the doors open with all the economic and workforce challenges we face in the current economy and the competition from the big-box retailers."

Kathryn Draeger "says rural communities need more than just dollar stores and gas stations," Hardy adds. "As the director of regional sustainable development partnerships at the University of Minnesota, Draeger works with grocery stores across the state. Aside from the health benefits of fresh food, she said rural stores are key to building more resilient supply chains since they can procure products from a variety of small vendors."

Smaller meatpacking businesses struggle to compete with mega processors, USDA grants aren't enough

Greg Gunthorp at his small meat packing operation in
Indiana. (Photo by Chelsi Daley, Investigate Midwest)

Mega meatpackers dominate so much of the market that smaller meat processors are forced to seek contracts and business beyond grocery stores. "Even with $1 billion in federal grants available to them, many still struggle to compete" with slaughterhouse giants Tyson Foods, JBS, Smithfield and Marfrig, reports John McCracken of Investigate Midwest. "The Biden administration has tried to address the concentration, including offering grants to help small processors expand. But it's not enough for many small processors that face proportionately higher operating expenses than the industry giants, according to interviews with small processors and experts."

Greg Gunthorp operates a small meat processing plant in northern Indiana. Over the past 20 years, he has sold niche meats "to chic Chicago and Indianapolis restaurants and to Chicago O'Hare International Airport. He also sold direct to consumers," McCracken reports. "But selling in grocery stores was not an option, as the largest meatpackers often have those contracts. In his circumstances, he found it difficult to compete in the chicken industry, and he recently stopped raising and slaughtering the bird." He told McCracken, "In an extremely concentrated marketplace, it's difficult for a small processor — especially a plant that slaughters — to find a sweet spot somewhere to fit long term."

"When asked about the problems small processors identified, the Department of Agriculture responded that the $1 billion in grants it's invested in expanding small processors 'is a historic investment that will directly combat consolidation in the meat processing sector and help build resiliency in the face of market disruptions,'" McCracken writes. "Just 12 federally inspected plants produced slightly less than half of the country's beef supply in 2022, according to Investigate Midwest's analysis of USDA data. The same year, 14 plants produced about 60% of the nation's pork."

Giant meatpacking companies save money through scale, owning their animals and "contracts with retailers, ensuring their product ends up at grocery stores," McCracken reports. Bill Bullard, the CEO of R-CALF USA, which advocates for independent cattle producers, told McCracken, "They've exceeded any efficiencies associated with economies of scale and are now engaged in controlling the marketplace."

"The funding is a promising sign in addressing the industry's concentration, said Peter Carstensen, a professor of law emeritus at the University of Wisconsin and an antitrust law expert," McCracken writes. "But the administration should also be using its antitrust enforcement capabilities more than it is, he said."

How can the local supermarket be saved? This rural Kansas town of 1,000 has some tips for Chicago.

The Erie Market sets an example of how local grocers
 might survive. (Photo by Joe Barrett, The Wall Street Journal)

Facing lower profits and increased crime, many Chicago supermarkets are closing their doors. But some local governments are not giving up, and they've found a unique partner to help them learn how to open and run a municipally-owned grocery store -- the Erie Market in rural Erie, Kansas, pop. 1000, reports Joe Barrett of The Wall Street Journal.

"At the moment, things aren't going especially well. Erie Market, which the city took over in 2021, is losing money almost every month amid stiff competition from a Walmart 15 miles away and a Dollar General across the street. The store has slashed prices, cleared the shelves of expired items and put in a salad bar to try to bring more people through the door. But leaders aren't giving up." Erie City Council member Jason Thompson, a Republican who owns a trash-hauling business, told Barrett, "Without a grocery store, what are we going to do? It would kill this small town and it's hard enough to keep it alive as it is."

While Erie is one of few small towns to move to town-owned supermarkets, larger, more metro areas are also considering the idea. "Last month, Chicago, population 2.7 million, launched a study on the feasibility of opening a municipally-owned grocer to get more fresh foods and spur economic development in a number of mostly low-income neighborhoods," Barrett explains. "Chicago, which has lost six groceries on its South and West sides in the past two years alone, aims to take advantage of a new $20 million state fund designed to address what are known as food deserts across Illinois. Studies show that lack of access to fresh foods can have big impacts on health outcomes and rob neighborhoods and entire towns of economic vitality."

Having a municipally-owned grocery stores means an area can keep its local market even if it operates at a loss -- especially in the beginning. Ameya Pawar is a former Chicago City Council member and now a senior adviser at Economic Security Project, which will be working with the city on the economic feasibility study, including a planned trip to places like Erie to see how things work. Pawar told Barrett, "Communities and people in those communities deserve to survive and thrive. And, you know, that might mean accepting an operating loss for a grocery store."

Grocery stores have low margins, so earning a profit can be hard, but it can be done. "Less than 10 miles away [from Erie], the even smaller city of St. Paul, pop. 600, has run a successful city-owned grocery for about 16 years," Barrett reports. "Rick Giefer, who was mayor when the grocery store opened in 2007, said the town hadn't had a grocery store for 20 years and was facing the threat of losing its high school. City leaders thought a grocery would help keep the population in town. They reasoned that if they could sell water through a municipal entity, they could also sell food. . . . James Voorhies, who has run St. Paul Supermarket with his wife, Kelly, for about 10 years, says the business supports itself, including paying for new equipment. The city, he says, 'really doesn't have to do anything — they just oversee it.'"

Small town grocer co-ops and technology offer innovative answers for residents living in food deserts

CoBank map, from USDA Economic Research Service
Food Access Research Atlas data

 
 

It's more common for rural U.S. households to experience food insecurity, and while finding reliable access options has proved difficult, new business delivery options are offering solutions to hunger, reports Billy Roberts of CoBank. "Rural communities comprise 63% of all U.S counties but 87% of the counties with the highest food insecurity rates. . . . The Brookings Institution found delivery zones are concentrated in larger metropolitan areas, with only 37% of rural residents having access to any of the analyzed food delivery services."

While convenience and "dollar" stores have increased in rural towns, their ability to supply fresh food is still limited by population density. Additionally, when community revenue is compared between a dollar store and a local grocer, the local grocery store is a far better investment. Roberts reports, "CoBank and Food Co-op Initiative have worked together to expand programs for rural communities that have lost (or are at risk of losing) local grocery options. . . . An example is Marmaton Market in Moran, Kansas. A for-profit corporation operating under cooperative principles proved to be the solution for the town of 500. . . . The store emphasizes local as a means of supporting the economy, building morale and creating a stronger sense of community."

Beyond co-ops, current shipping and technology-based rural food delivery systems offer solutions. "Particularly for shelf-stable food and beverage, delivery mechanisms exist, even if it takes the form of FedEx, UPS or USPS. Fresh food offerings present another challenge altogether, but more direct-to-consumer approaches should, in the long term, be able to capitalize on improvements in technology (whether drone delivery or driverless trucks) to reach those who don't live near a grocery store," Roberts reports. "In collaboration with Gatik, Tyson Foods will deploy AI-assisted autonomous trucks to haul prepared meats over predetermined short-haul routes to distribution and storage facilities in northwest Arkansas."

As online options and technology improve, more delivery possibilities are created. "Whole Foods has made hundreds of its 365 private-label products available for U.S. shipping through Amazon," Roberts adds. "For its part, Walmart and Google subsidiary Wing are teaming up to test 30-minute drone delivery of household essentials and groceries to customers' homes within a six-mile radius of two stores in the Dallas-Fort Worth area. . . . These examples indicate where retailers — whether grocery stores or even convenience stores or dollar stores — could serve rural consumers and offset the issue of food insecurity stemming from limited access."

With smart planning and community spirit, some rural places succeed in keeping their local grocery stores open

Royal Super Mart allows families stay in town to shop.
(Royal Super Mart courtesy photo via The Post)

Rural grocery stores have been closing because of fewer residents, larger competitors and labor shortages. And that leaves residents with longer drives for staples and another community gathering space shuttered. Some states and rural towns, such as South Dakota and Sheffield, Illinois, have saved their local grocery stores with collaboration, creativity and resourcefulness.

North Dakota’s Commerce Committee and legislature began studying the closing of its rural grocery stores in 2019. Their research revealed that “North Dakota lost 15% of its rural grocery stores in towns with fewer than 2,100 people between 2013 and 2019, reports Laura Simmons of High Plains Reader. The losses were “driven by declining populations, distribution costs. . . online sales and dollar stores, according to North Dakota Grocers Association President John Dyste. 'North Dakota is losing rural grocery stores at an alarming rate, causing consumers to travel greater distances to access healthy food choices such as fresh meat and produce. This especially affects the elderly and low-income members of these communities; they are in many cases left with few choices to purchase healthy foods.'”

Strategies to help alleviate these problems included "collaborative purchasing and a spoke-hub distribution system," Simmons explains. "Rural Access Distribution Cooperative implemented these ideas in Walsh County. Three grocery stores in Park River, Hoople and Edinburg order together through separate accounts from the same supplier. This supplier then drops off all the food at Jim’s Supervalu in Park River. RAD then transports Edinburg's and Hoople’s food to the correct store. This format helps increase volume, which decreases price."

Bata told Simmons, “The community has supported us overwhelmingly. I think that this is showing in the numbers. . . . Hoople Grocery saw a 23% increase in sales and Edinburg’s Market on Main saw a 16% increase in sales."

In Sheffield, Illinois, Royal Super Mart owner John Winger wanted to sell his store and retire, but he couldn't find a buyer, reports Sydney Page of The Washington Post. "Apart from his store, Royal Super Mart, the nearest full-service grocery store is 15 miles away from the tiny town of Sheffield, Ill., a farming village with a population of about 800 people." When Royal Super Mart opened in 1940, it was one of four local groceries in town.

Winger felt like closing the store would be abandoning his neighbors, especially residents without transportation. Page reports, "Then last summer, Elizabeth Pratt, who grew up in a nearby town and has lived in Sheffield for 12 years, approached Winger with an idea. She offered to raise money through her nonprofit, a local wellness center called Cornerstone Community Wellness, to buy the store, with the goal of transforming it into a sustainable social enterprise, which is a business that reinvests its profits into its mission. This would ensure people would not have to leave Sheffield to buy fresh food."

"In a matter of months, the community raised $500,000, which was enough for Cornerstone Community Wellness to purchase the property and overhaul the store. Roughly 125 individuals donated, and contributions ranged from $5 to $50,000. About 15 percent of donations came from grants and corporations," Page writes. "Sheffield residents who donated were aware of the role local grocery stores play in both community and economic development in areas such as Sheffield. They also saw how the loss of independent supermarkets hurt other small towns."

When Safeway and Fry's started talking about merging, rural Arizona residents pushed back

In rural Arizona, resident are leery of grocery store mergers.
(Photo by Craig Smith, KGUN-ABC)

As Safeway and Fry's grocery store chains start discussing mergers, rural Arizona residents are concerned. "Rural opposition is coming together to a proposal to merge the Fry’s and Safeway grocery chains," reports Craig Smith of KGUN-ABC in Tuscon, Ariz. "The plan would have a nationwide impact because grocery brands in many states are part of the parent companies Kroger and Albertsons/Safeway."

Cochise County, pop. 125,500, over 6,219 sq. miles

(Wikipedia map)

Residents worry further corporate consolidation would inevitably close their neighborhood grocery store. "In a small town like Benson, you might only have a few places to go shopping for groceries. Skeptics about the merger say if it does close stores, people in Cochise County could have some long drives to get their groceries," Smith explains. Sierra Vista Mayor Clea McCaa "says with one Safeway and one Fry's, half of his city could become a food desert if the stores consolidate and one closes. He’s afraid of reduced competition, higher prices, and reduced access to other critical services like pharmacies."

The town of Douglas, which is also in Cochise Country, has already lost one grocery store. "Last year, Food City shut down. That left Douglas with a Walmart as its only large grocery," Smith adds. "Douglas Mayor Donald Huish says that costs people in his town time, trouble and money. Congressman Ruben Gallego is teaming up with rural mayors to send a letter to the Federal Trade Commission urging the FTC to reject the merger. Congressman Gallego says the merger could hurt small-town businesses too if customers drive out of town for their groceries and decide to do other shopping there too."

"Kroger is the company leading this merger effort," Smith reports. "Responding to the latest concerns, Kroger sent this: 'Kroger joining with Albertsons will mean lower prices and more choices for more customers in more communities, higher wages and more industry-leading benefits for associates, and growing union jobs. The only parties who would benefit if this merger is not completed are large, non-unionized competitors such as Walmart and Amazon.'”

Some farm groups object to proposed merger of Kroger and Albertsons, saying a bigger grocer will hurt small farmers

The planned merger of grocers Kroger and Albertsons "has farmers and farmworkers worried about its negative impact on farms and rural communities," reports Shelby Vittek of Ambrook Research. The National Family Farm Coalition, the National Farmers Union, Farm Action and an assortment of regional grower associations "sent a letter to the Federal Trade Commission expressing their opposition to the merger, which they said would 'create a new mega-grocery buyer with exceptional buyer power to squeeze its suppliers, shrinking farmers' and workers' share of the food dollar.'"

The merger, which could "cause conflicts with overlapping markets — Western Growers, the California Fresh Fruit Association, and Colorado Fruit & Vegetable Growers Association — submitted an additional letter to the FTC," Vitteck writes. "In it, the groups pointed to the Albertsons' acquisition of Safeway in 2015 — after which the company awarded contracts only to its largest produce suppliers, leaving smaller farmers to sell elsewhere — as an example of the negative outcomes that can be expected with a merger of this size." Their letter sums up the possible purchase: "The buying power of the newly combined Kroger entity cannot be understated."

Small farmers are already struggling to compete for sales to larger chain groceries. Vittek reports, "Farmers routinely sell their crops for less than what it costs to produce them. The pressure of farming with such small margins has led 'members to farm less acreage, move production to other countries when feasible, or leave farming altogether,' the letter from the Western grower groups read. If the Kroger-Albertsons merger is allowed to continue, competition among buyers will shrink, leaving farmers with fewer customers (in this case, grocery retailers) to work with."

American farmers face large-chain "take it or leave it" bargaining tactics, which can erase their profits, alongside competition from foreign growers. "The trade organizations that oppose the merger emphasize the harm done to American farmers as grocery retailers continue to source more foreign producers, who are ready, willing and able to undercut American producers on operating costs and the price they will accept from the retailer. . . . That is harmful for farmers, farmworkers and rural communities that depend on a robust agriculture industry.'"

The merged grocer would have 710,000 employees in 48 states, a workforce some would say already suffers from corporate greed. "Profiteering stands out at Kroger and Albertsons, with profits far outpacing worker wage growth or the cost of food," wrote Daniel Fleming and Judy Wood in a CalMatters op-ed. "Their outsize price hikes are at least partially responsible for inflation. Even while they were competing with each other, these companies jacked up prices and had record profits."

The Federal Trade Commission "is in no rush to approve the merger" because grocery prices are a big part of inflation, "a hot topic political issue that Republicans have pressed against President Biden," Thomas Lee reports for The Street.

A tale of two towns and dollar stores: One blocked Dollar General, one allowed it on 3-2 vote; local merchants worry

Leelanau County is the pinkie finger
of Michigan's mitt. (Wikipedia map)

What does a dollar store add to a small community, or perhaps take from it? That can be a loaded question.

In Leelanau County, Michigan, in 2019, residents got the zoning board to shut out Dollar General Corp.'s plans to build in the county seat of Empire  because the chain's reputation and look did not "fit" with their quaint, small-town vibe, and it's now the only Michigan county without a dollar store, reports Rose White of MLive, a Michigan newspaper chain. “Chain dollar stores tend to target food deserts like Empire . . . providing a limited selection of food to city neighborhoods or rural areas,” White writes, citing a report by the Institute for Local Self-Reliance.

Sperling's Best Places map

The dollar-store drama is playing out differently in Ebony, Virginia,  where some residents did not welcome Dollar General because they worried the store would "open the door to additional development that will spoil the character of their tiny, rural community of about 230 people," reports Michael Corkery of The New York Times. But not all the residents thought the chain would harm their town. "Jerry Jones grew up in Ebony. . . . He went on to manage grocery stores and later owned a gas station in Ebon. . . . Jones owns the land where the Dollar General would be built. He said the store would provide the county’s residents a convenient and affordable place to shop while also generating sorely needed tax revenue." Jones told Corkery: “You still need to have that balance between the people with nicer things and the people who live paycheck to paycheck. To me, Dollar General fits right in with that.”

The two places have some similarities; one big difference is that Empire is a summer tourist town where "quaint feel" has a financial impact. "Ebony sits on the edge of Lake Gaston and is a haven for second homes that serve as an important tax base" in Brunswick County, which has a median household income of $49,600, about the same as Leelanau's, but well under Virginia's statewide figure of $80,600, Cockery reports. "More than half the county’s population is Black." Only one-fourth of 1 percent of Leelanau County's is.

Brunswick County supervisors, by a 3-2 vote, "approved a zoning change that would allow the store to be built," Cockery reports. "The dispute in Ebony, which has been going on for more than three years, is about planning and zoning, but it also touches on a deeper issue simmering in many parts of rural America, whether the disputes are about cellphone towers or snowmobile trails. What does 'country' mean to different people in a small community?" Cockery asks.

But Dollar General is not winning everywhere. "The number of communities that are defeating specific dollar-store proposals or are enacting ordinances that control dollar store development is shooting up rapidly,” Kennedy Smith, a senior researcher at the Institute for Local Self-Reliance, told White. Much of the opposition comes from local business owners like Mohamed Abouemara, who "moved to southern Virginia from New York to operate convenience stores and has run the Ebony General Store for nine years," Corkery reports. "He said his store, where locals can socialize and buy hot food, played an important role in a rural community. A dollar store, he said, would significantly hurt his business."