Investigation shows scale of big food corporations' market dominance and political power

Edited by Eamonn Ryan, based on an article published in the Guardian newspaper

A handful of powerful companies control the majority market share of almost 80% of dozens of grocery items bought regularly by ordinary Americans, new analysis reveals.

A joint investigation by the Guardian and Food and Water Watch found that consumer choice is largely an illusion – despite supermarket shelves and fridges brimming with different brands. In fact, a few powerful transnational companies dominate every link of the food supply chain: from seeds and fertilisers to slaughterhouses and supermarkets to cereals and beers.

The size, power and profits of these mega companies has expanded thanks to political lobbying and weak regulation which enabled a wave of unchecked mergers and acquisitions. This matters because the size and influence of these mega-companies enables them to largely dictate what America’s two million farmers grow and how much they are paid, as well as what consumers eat and how much our groceries cost.

It also means those who harvest, pack and sell us our food have the least power: at least half of the 10 lowest-paid jobs are in the food industry. Farms and meat processing plants are among the most dangerous and exploitative workplaces in the country.

Overall, only 15 cents of every rand we spend in the supermarket goes to farmers. The rest goes to processing and marketing our food. The Guardian and Food and Water Watch investigation into 61 popular grocery items reveals that the top companies control an average of 64% of sales.

We found that for 85% of the groceries analysed, four firms or fewer controlled more than 40% of market share. It’s widely agreed that consumers, farmers, small food companies and the planet lose out if the top four firms control 40% or more of total sales.

Our investigation is based on the analysis of market share data from thousands of supermarkets across the US.

“It’s a system designed to funnel money into the hands of corporate shareholders and executives while exploiting farmers and workers and deceiving consumers about choice, abundance and efficiency,” said Amanda Starbuck, policy analyst at Food & Water Watch.

The consolidation runs deep: four firms or fewer controlled at least 50% of the market for 79% of the groceries. For almost a third of shopping items, the top firms controlled at least 75% of the market share.

For instance, PepsiCo controls 88% of the dip market, as it owns five of the most popular brands including Tostitos, Lay’s and Fritos. Ninety-three per cent of the sodas we drink are owned by just three companies. The same goes for 73% of the breakfast cereals we eat – despite the shelves stacked with different boxes.

Grupo Bimbo owns 64% of the bagel and bialy market, which includes several well known brands like Sara Lee and Thomas'.

A whopping 93% of the sodas Americans drink are owned by just three companies.

Big food is getting bigger

For shoppers, it might seem like choices galore at the store, but most of our favorite brands are actually owned by a handful of food giants, including Kraft Heinz, General Mills, Conagra, Unilever and Delmonte.

Kraft Heinz, the result of a US$63bn mega-merger in 2015, which was backed by Warren Buffett and a Brazilian private equity firm, appears 12 times in the top four firms for groceries, with products ranging from bacon, sour cream and coffee to frozen meat substitutes and fruit juice.

The big firms are helped by so-called category captains who represent leading brands or manufacturers and work with major retailers to decide which products get prominent spots on our supermarket shelves. And then there’s the slotting fees – payments by big-brand manufacturers for eye-catching product placement. This makes it hard for new independent brands to get a break. And when they do get a tiny foothold, it often doesn’t last.

For example, while hipsters and old-school beer enthusiasts have contributed to a boom in local craft beers, the Belgian company Anheuser-Busch InBev acquired 17 formerly independent craft breweries between 2011 and 2020. It might not be clear to consumers from the labels, but the company owns more than 600 brands, including the mainstream favorites Budweiser, Michelob and Beck’s.

Another source of confusion is private labels – supermarkets' own brands, of which little is known about the producer – which appeared in the top four of 77% of the groceries we looked at. For frozen fruits like the mixed berries used for smoothies and desserts, private labels account for 66% of the market share, as well as 56% of refrigerated whole milk and 54% of eggs sales.

Supermarket chains dominate

Less competition among agribusinesses means higher prices and fewer choices for consumers – including where they can shop for food.

Until the 1990s, most people shopped in local or regional grocery stores. Now, just four companies – Walmart, Costco, Kroger and Ahold Delhaize – control 65% of the retail market.

“Corporate consolidation can drive up food prices and reduce access to food,” said Starbuck. “Supermarket mergers drive out smaller, mom-and-pop grocers and regional chains. We have roughly one-third fewer grocery stores today than we did 25 years ago, according to the US census bureau.”

As countless mom-and-pop stores struggled to stay afloat during the pandemic lockdowns, revenue for Walmart US hit US$341bn - almost 3% higher than the previous year.

Grocery chains and superstores are also the main beneficiaries of government aid for Americans struggling to feed their families. In 2020, 82% of all food stamps were spent in supermarkets and superstores like Krogers, Walmart, Costco and Sam’s Club, which means the taxpayer contributed US$64bn to their revenue.

The meat market – and sticky commodity prices

A spate of mega-mergers means that meatpacking plants are now controlled by just a handful of multinationals including Tyson, JBS, Carghill and Smithfield (now owned by the Chinese multinational WH Group). Proponents of capitalism claim mergers and acquisitions generate efficiencies that cut costs for farmers and benefit consumers by keeping prices down. But the tight grip these companies have over the industry means farmers have little choice about whom they sell to and how their animals are raised.

Consumers pay more while profits for mega meat processors are booming: in 2020, the Brazilian firm JBS reported US$51bn in revenue – a 32% rise compared with the previous year. China is driving much of the company’s growth, and JBS accounted for 50% of beef exports from the US last year. The proportion of arable land dedicated to producing meat is expanding but this is largely to feed consumers overseas. Per capita meat production flatlined in the US between 2005 and 2020, while the value of exports almost doubled.

Consumers are also hurt by so-called sticky prices. Commodity prices can rise due to shortages caused by unexpected events such as floods or drought that disrupt the supply chain – which happened at the start of the pandemic. When this happens, supermarkets are quick to increase prices to ensure profit margins remain intact, but when commodities go down, consumer prices are often much slower to decrease.