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Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Supersizing the Supermarket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 TheRiseofMonolithicFoodManufacturers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Intenseconsolidationthroughoutthesupermarket .......................7 Consumerchoicelimited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Storewide domination by a few firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SupermarketStrategiestoManipulateShoppers .........................9 Sensorymanipulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Product placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Slottingfeesandcategorycaptains ...............................11 Advertisingandpromotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
ConclusionandRecommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Appendix A: Market Share of 100 Grocery Items . . . . . . . . . . . . . . . . . . . . . . . . . .13 Appendix B: Top Food Conglomerates’ Widespread Presence in the Grocery Store . . . . . . . .27 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Executive Summary
Groceries are big business, with Americans spending $603 billion on grocery products in 2012.1 Big-box food retailers like Walmart and national grocery store chains now dominate the grocery industry. These mega-retailers are the biggest buyers of grocery products, and they exert tremendous power over food companies and ultimately farmers. This has led to a handful of food companies producing the majority of the products in the supermarket.
This growing consolidation of the food supply is severe at every step of the food chain, from farm to fork. And
it impacts not only farmers and food manufacturers, but also consumers in the form of reduced consumer choices and higher grocery prices. Since the Great Recession started, grocery food prices rose more quickly than infla- tion and wages — twice as fast between 2010 and 2012.2 At the same time, the largest food, beverage and grocery retail companies pocketed $77 billion in profits in 2012.3
Nationally, the growing size and market power of the top grocery retailers has had tremendous ripple effects across the food chain. Food & Water Watch examined 100 types of grocery products and found that the top few compa- nies dominated the sales of each grocery item in recent years.
Key Findings:
 In2012,morethanhalfofthemoneythatAmeri- cans spent on groceries (53.6 percent) went to the four largest retailers: Walmart, Kroger, Target and


Safeway.4 Walmart alone sold nearly a third (28.8 percent) of all groceries in 2012.5
The top companies controlled an average of 63.3 percent of the sales of 100 types of groceries (known as categories in industry jargon). In 32 of the grocery categories, four or fewer companies controlled at least 75 percent of the sales. In six categories, the top companies had more than 90 percent of the sales, including baby formula and microwave dinners.
Manyfirmssellmultiplebrandsofthesameproduct, which leads consumers to believe that they are choosing among competitors when they are actually just choosing among products made by the same firm that may have been made at the same factory. This is true across the board, including organic and healthful brands typically seen as independent, but which are being bought up by large food companies unbeknownst to consumers.
Supermarketsengageinahostofstrategiesto manipulate the shopping experience, encouraging consumers to make impulse and more expensive purchases that are unknown to consumers.
Regulatorshavelargelyleftmega-retailerstooperate unchecked as they invented new ways to extract value from consumers and even large food proces- sors. It is time for regulators to step in to protect consumers and restore some semblance of competi- tion for consumers in grocery stores, providing a chance for innovative, small or local food companies to get on store shelves.


2
Food & Water Watch 
Introduction
Bright lights, muzak, colorful displays and endless ways to spend your money before you can reach the exit. No, this is not a casino — it’s a typical supermarket. When consumers shop for groceries every week, they run a gauntlet of marketing and advertising ploys just to put food on their families’ tables.
Groceries are big business. Americans spent $603 billion on grocery products in 2012.6 Supermarkets have gotten bigger and more complicated to capture these sales. More than half (55 percent) of consumers’ purchases are made on impulse,7 making them vulnerable to grocery store marketing hijinks. Shoppers know that the prod- ucts in the checkout aisle are there to encourage impulse purchases, but every little detail of the supermarket’s landscape — layout, atmosphere and product placement — is designed to alter a shopper’s decisions.
Big-box food retailers like Walmart and sprawling grocery store chains now dominate the grocery industry. Supermarkets pack their shelves with a cornucopia
of grocery products and brands, but consumers have very few choices that matter when it comes to which company made the food or whether it is a smart choice in terms of price or quality. A handful of food companies makes almost all the products in the supermarket. These manufacturers heavily market the highly processed sugar- and salt-laden convenience foods in the middle of the store as opposed to more nutritious options, because the less-healthy items are bigger moneymakers.
Big agribusiness and food companies have a strangle- hold on every link in the food chain, from farm to fork. Only a few firms sell seeds, tractors and fertilizer, and
a few others buy corn, cattle and carrots. For years, this consolidation has meant that farmers receive a shrinking percentage of the dollars that consumers spend on
food. But this growing consolidation of the food supply impacts consumers, too — whether or not they realize
it — in the form of reduced consumer choices and higher grocery prices.
Shoppers have certainly faced high and rising grocery prices over the past five years. The industry trade maga- zine Progressive Grocer reported in 2013 that, “Prices for grocery items remain high” and “have risen every month over the past two-and-a-half years.”8 Since the Great Recession started, grocery food prices rose more quickly than inflation and wages, and over the three years between 2010 and 2012 grocery food prices rose twice as quickly as average wages.9 At the same time, the largest
Figure 1.
2.5%
1.8%
1.2%
Food at home
Total inflation
Average wages
SOURCE: U.S. BUREAU OF LABOR STATISTICS, FOOD AT HOME, ALL ITEMS INFLATION, AVERAGE HOURLY EARNINGS OF PRODUCTION/NON-SUPERVISORY WORKERS
food, beverage and grocery retail companies pocketed an estimated $77 billion in profits in 2012.10
Supersizing the Supermarket
Today, consumers buy groceries from a small number of large, powerful supermarket chains and supercenters. On the local level, shoppers have a diminishing choice of grocery stores as the biggest firms snap up local chains and drive others out of business.11 Nationally,
the growing size and market power of the top grocery retailers has had tremendous ripple effects across the food chain. The grocery giants’ bulk purchases drive food manufacturing companies to merge and get bigger, which reduces the number of food processors filling supermarket shelves, further eroding consumer choice and raising prices.
Until recently, most consumers shopped at regional and local supermarket chains. In 1997, Americans bought about one-fifth of their groceries (20.8 percent) at the four largest grocery retailers.12 But the rise of the big-box
Grocery Goliaths 
3
food retailers like Walmart precipitated a wave of supermarket mergers starting in the 1990s that created a network of national supermarket chains.13 Chains like the second largest grocery retailer Kroger still display the old regional store names like Dillons, Smith’s, Fred Meyer, King Soopers and others.14 Many shoppers may not even realize that their supermarket is owned by a national or even foreign grocery store chain. (See Table 1.)
At the same time, supercenters and warehouse club stores have emerged as new grocery powerhouses, further shifting the food retail market toward the
largest players. In 2012, more than half of the money that Americans spent on groceries (53.6 percent) went
to the four largest retailers: Walmart, Kroger, Target
and Safeway.20 Walmart alone sold nearly a third (28.8 percent) of all groceries in 2012.21 On the local level, the consolidation can be much higher. In 231 metropolitan areas, just four big retailers made more than 80 percent of grocery sales in 2011, and Walmart made up half of all grocery sales in 35 cities.22
The grocery industry justifies the growing size of big-box and merging grocery chains as a way to increase effi- ciency, lower costs and pass savings on to consumers.23 But most supermarkets just pocket any savings in the
Table 1. 
form of higher profits, while consumers rarely benefit.24 The dominant supermarkets can charge consumers considerably more than it costs to put groceries on store shelves, and they have little incentive to pass price discounts on to consumers if they have few or no competitors in a local market.25
Instead, higher levels of grocery store consolidation lead to higher food prices. The link between grocery consoli- dation and retail grocery prices has been studied exten- sively, and the vast majority of studies have found that food prices rise when retail concentration increases.26
A U.S. Department of Agriculture research economist concluded that “the overwhelming consensus is that prices rise — and, in general, supermarkets set prices less competitively — as concentration increases.”27
Higher levels of concentration among local retailers allow competitors to coordinate pricing strategies.28 Local supermarkets mimic each other’s pricing strate- gies, which makes it nearly impossible for consumers
to comparison shop for grocery savings when a small number of grocery retailers all price their foods at about the same level.29
The Rise of Monolithic
Food Manufacturers
The largest supermarket chains and big-box stores limit consumer choices not only on where to shop, but also what to buy. These mega-retailers are the biggest buyers of grocery products, and they exert tremendous power over food companies and ultimately farmers.
Retailers exert leverage by picking and choosing their suppliers, but suppliers rely on a few retailers for the bulk of their sales.30 The large quantities of products required by the biggest grocery retailers favors the biggest companies. Large food manufacturers can supply large volumes and varieties of grocery products all at lower prices. Smaller, innovative food companies have difficulty getting onto supermarket shelves because they cannot meet the contract terms or afford to accept the low, often unfair prices from retailers. Of the new food companies that survive, many end up being bought
out by the largest manufacturers, which reinforces the entrenched food companies.31
Supermarket buyer power has encouraged many food manufacturers to pursue their own mergers, further consolidating much of the food processing industry. Between 1997 and 2002, most segments of the food processing industry became more consolidated, and the
Corporate Name
Chain Rank 201215
Store Names

(Cincinnati, Ohio)16
2
Kroger, Ralphs, Food
4 Less, FoodsCo, Jay C, Owen’s, Pay Less Super Markets, Scott’s, Ruler Foods, City Market, King Soopers, Fry’s Food
& Drug, Smith’s, Fred Meyer, QFC, Dillon’s Food Stores, Baker’s

(Pleasanton, Calif.)17
4
Safeway, Vons, Pavilions, Randalls, Tom Thumb, Dominick’s, Carrs,
Pak ‘N Save

(Quincy, Mass./ Netherlands)18
6
Stop & Shop, Giant, Peapod

(Salisbury, N.C./ Belgium)19
9
Food Lion, Hannaford, Bottom Dollar Food, Harveys, Sweetbay
4
Food & Water Watch 
increased concentration led to significant consumer price increases for most foods.32 Bigger food companies aim to be among the top three sellers of key grocery items, and they actively target smaller and local brands as well as the lesser brands of their competitors for acquisitions or mergers.33
The Great Recession dampened the pace of food mergers, but as the economy improved for businesses (if not everyone else), merger-mania returned. Food companies continued to consolidate after 2008, and the number of mergers soon could hit the pre-recession clip of 100 annu- ally.36 Since 2012, there have been numerous notable food company mergers and acquisitions. (See Table 2.)
Food & Water Watch examined 100 types of grocery products and found that the top few companies domi- nated the sales of each grocery item in recent years. Most parts of the supermarket were extremely consoli- dated, consumer choices were limited by the dominance of the major food companies and a few companies had penetrated nearly every aisle of the store. (See Appendix A for full list of grocery items, companies, brands and market shares.) Food & Water Watch analyzed the most recent data available for the top four companies in each of the 100 common food items. (See Methodology on page 29.)

The Rise of Food Monopoly
The biggest food processing companies didn’t start out that way — they spent decades buying out their compet- itors and growing into multinational powerhouses. Take Nestlé, for example. What began as a small family milk  prepared food, water, ice cream and many other food companies over a century to become one of the largest food companies in the world.34 (See the Nestlé timeline on page 6 for more.) Kraft Foods, now a processed- foods industry leader, began as a family cheese busi- ness in 1909 that gradually became a massive food conglomerate through mergers and acquisitions (both acquiring smaller companies and being acquired by larger ones, such as National Dairy Products Corpora- tion and Philip Morris Companies). It now produces  dogs, mustard, Kool-Aid, Lunchables and more.35
Table 2.
Type of Grocery
Buyer
Target
Beer
Anheuser- Busch InBev
Grupo Modelo (Corona, Modelo) for non-U.S. market, U.S. Modelo brands to sold to winery company Constellation Brands, Inc.37
Salad Dressing
Pinnacle Foods
Purchased Wish-Bone salad dressing brand from Unilever.38
Frozen Dinners
ConAgra
Purchased Bertolli and PF Chang frozen meals from Unilever.39
Supermarket Brands for Peanut Butter, Cereal, Crackers, Cookies and more
ConAgra
Purchased major supermarket brand manufacturer, Ralcorp.40
Potato Chips
Kellogg
Purchased Pringles potato chips from Proctor & Gamble.41
Dairy/Non-dairy Products
Saputo, Inc.
Purchased Morningstar brands from Dean Foods.42
Bread
Flowers Foods, Grupo Bimbo
Flowers Foods purchased Wonder Bread, Nature’s Pride, Home Pride, Butternut and Merita brands from Hostess Foods bankruptcy. Grupo Bimbo purchased Beefsteak bread business from Hostess.43
Snack Cakes
Mckee Foods, Apollo Global Management
McKee Foods purchased Drake’s Ring Dings, Yodels and Devil Dogs from Hostess; the investment fund Apollo Global Management bought the Twinkies and Dolly Madison snack lines.44
Peanut Butter
Hormel
Purchased Skippy peanut butter from Unilever.45
Grocery Goliaths  5
6 Food & Water Watch 
Timeline:(1905–2013)
Nestlé Co.
Nestlé and Anglo-Swiss Condensed Milk Co.
Anglo-Swiss Condensed Milk Co.
1929 1947
Peter, Cailler, Kohler Chocolats Suisses S.A.
Spillers Petfoods Contadina (tomato products)
1905
1999 Coffee businesses 1998 San Pellegrino,
2000 2000
PowerBar
Findus Frozen Foods
Acquisition
(frozen meals, Lean Cuisine) L’Oréal (29% minority share)
2003 Beverage Partners Worldwide 2004
Flipz pretzels, Ortega Valio ice cream Wonderball
Divestiture
Joint Venture
1960
Crosse & Blackwell
2001 David & Sons (sunflower seeds) 2002 ChefAmerica frozen foods
1962 1969
Findus Frozen Foods
1995 Ortega (Mexican foods)
(Hot Pockets)
1970
Libby’s
1992 Perrier (Arrowhead, Calistoga, Deer Park, Poland Spring,
1973 1974
Stouffer’s
1991 Drumstick ice cream
1970s
(Beringer Vineyards, Chateau Souverain, Napa Ridge, Meridian Vineyards, C&B Vintage Cellars)
Nestlé USA
formed 1990
1977
Alcon Laboratories
Joseph’s Gourmet Pasta
Nestlé S.A.
1989 Butterfinger, Baby Ruth, Pearson
2007 Gerber (baby food products), Novartis Medical Nutrition
1981
1988 1986
Rowntree (Kit Kat, Smarties, Rolo, Wonka), Buitoni (pasta)
2007 Nestlé Turtles
1984
Bit-O-Honey, Chunky, Raisinets, Oh Henry!, Goobers, Sno-Caps
Maggi
1997
1995 Wine World Estates
2001 Ralson Purina (pet foods), Häagen-Dazs
(bouillon, seasonings)
(canned food items)
Vittel water
2002
(canned meat, fruit, vegetables, and Juicy Juice)
Zephyrhills, Great Bear)
2003 Mövenpick ice cream, Dreyer’s ice cream
Wine World Estates
2004
(pharmaceutical)
1977 (name change) Libby’s canned
(medical foods)
vegetables and fruits
1994
Alpo (pet food)
Fonterra joint venture: Dairy Partners America
1991
Coca-Cola joint venture:
1990 General Mills joint venture: Cereal Partners Worldwide
Jenny Craig,
2006 Uncle Toby’s (cereal),
2010 Hills Bros. Coffee 2010
Kraft’s frozen pizza business
L.J. Minor (foodservice)
(DiGiorno, Tombstone, California Pizza Kitchen)
1985 (Chase & Sanborn, MJB),
Alcon Laboratories 2013 Bit-O-Honey candy
Carnation (Friskies, Contadina)
Intense consolidation
throughout the supermarket
Food & Water Watch found that the top companies controlled an average of 63.3 percent of the sales of
100 types of groceries (known as categories in industry jargon). In a third (32) of the grocery categories, four or fewer companies controlled at least 75 percent of the sales. In six categories, the top companies sold more than 90 percent of the category sales, including baby formula and microwave dinners. (See Table 3.)
In most cases, there were four companies that dominated the majority of the sales of each grocery item, but in
23 categories only three companies sold most of the units, and there were only one or two major rivals in 15 categories. Mondelēz International (formerly part of Kraft Foods) alone sold 60.9 percent of all cream cheese sales under its Philadelphia brand, and the majority of the rest of the market was store-brand cream cheese. Two little- known manufacturers (Grupo Bimbo and Flowers Foods) sold 73.7 percent of the bagels and English muffins, primarily Bimbo’s Thomas’ brand.
Consumer choice limited
Many firms sell multiple brands of the same product, which leads consumers to believe that they are choosing among competitors when they are actually just choosing among products made by the same firm that may have been manufactured at the same factory. Pinnacle Foods sells both Mrs. Paul’s and Van de Kamps frozen fish products. Two firms that sell a host of brands dominate margarine. Unilever sells I Can’t Believe It’s Not Butter!, Shedd’s Country Crock, Imperial, Promise and Brummel & Brown, and ConAgra Foods sells Blue Bonnet, Parkay and Fleishmann’s.
This is true across the board, including organic and healthful brands typically seen as independent, but that are being bought up by large food companies unbe- knownst to consumers. And consumers won’t figure it out by reading the labels, which often do not reflect the corporate ownership. For example, Kashi and Bear Naked are both Kellogg brands, but Kellogg’s ownership is concealed from consumers — the Kashi and Bear Naked labels and consumer websites make them seem indepen- dent, even though Kellogg’s government filings reveal that the company owns the brands.46
Kellogg Co., General Mills, PepsiCo and Post Foods control 79.9 percent of cereal sales, making shoppers hard pressed to find a box of cereal that wasn’t owned by
Table 3. 

Grocery Item # of Companies
Market Share
Sports Drinks 2 98.9%
Mediterranean Food 2 96.8%
Baby Formula 3 96.3%
Carbonated Soft Drinks (Diet) 4 95.3%
Microwaveable Packaged Dinners
3 94.6%
Baked Beans 4 91.0%
Canned and Bottled Tea 4 89.9%
Carbonated Soft Drinks 4 89.2%
Baby Food and Snacks 3 88.8%
Indian Food 3 87.0%
Beer 4 86.1%
Dry Mac & Cheese 2 84.8%
Wellness/Granola Bars 3 84.6%
Sugar 4 84.0%
Athletic Bars 3 82.8%
Chili and Sloppy Joe Sauce 4 82.6%
Tortilla Chips 4 82.5%
Frozen Meals 4 82.0%
Pet Food 4 81.9%
Chocolate 4 80.8%
Gum and Mints 3 80.6%
Shelf-Stable Dips 4 80.6%
Granola Bars 3 80.5%
Breakfast Cereal 4 79.9%
Mayonnaise 2 79.4%
Cereal/Snack Bars 4 79.1%
Meat Substitute 4 78.3%
Pizza, Frozen 4 78.2%
Ketchup 3 76.7%
Crackers 3 76.5%
Refrigerated Yogurt 3 75.8%
Potato Chips 4 75.7%
Grocery Goliaths 
7
SOURCE: FOOD & WATER WATCH ANALYSIS OF MARKET SHARE DATA, SEE METHODOLOGY ON PAGE 29.
one of the big national manufacturers. The “choice” that consumers have in the cereal aisle comes largely from which variation (frosted or chocolate-flavored) of the big companies’ brands they select. In the cracker aisle, the well-known brands like Ritz, Keebler, Wheat Thins and Triscuits are owned by Mondelēz International (formerly Kraft) and Kellogg, but even seemingly independent
and healthful options such as Kashi are also owned by Kellogg.47 (See Table 4.) These two firms control 61.1 percent of cracker sales, making it more difficult for shop- pers to find a name-brand box of crackers that wasn’t produced by one of the big national manufacturers.
Big food companies offer a proliferating number of brands and varieties to increase sales, and this may also be a strategy to prevent new firms from getting onto store shelves.48 In the late 1980s, Frito-Lay (a PepsiCo subsidiary) stopped worrying about developing new snack products and instead just expanded on the lines of prod- ucts they already had — Lay’s potato chips got a handful
of new flavors, and Cheetos gained 21 new varieties — to expand sales of the existing brands.49

Several processed food companies have their fingers in many pies in the supermarket, sometimes literally (see Appendix B). Five major manufacturers (Kraft Foods, PepsiCo, Nestlé, ConAgra Foods and General Mills) have a presence — often a major market share — in more than one-sixth of the grocery products that Food & Water Watch examined. Kraft Foods is a major manufacturer in 22 items and dominates macaroni and cheese, processed cheese, lunchmeat and mayonnaise (79.0 percent of sales, 48.3 percent, 34.8 percent and 33.9 percent, respectively). But Kraft also sells coffee, condiments (mustard, salad dressings and pickles), other dairy products (natural cheese and sour cream), frozen cakes and pies, and snack nuts. These major companies can be found in almost every aisle of the supermarket.
Table 4.
Grocery Item
# of Top Firms
Company/ Market Share
Top Brands
Breakfast Cereal
Top 4 Firms
79.9%
Kellogg Co. 30.3%
Frosted Flakes, Froot Loops, Raisin Bran, Raisin Bran Crunch, Special K Vanilla Almond, Special K Red Berries, Apple Jacks, Corn Pops, Rice Krispies, Kashi Go Lean, Crispix, All-Bran, Frosted Mini Wheats, Corn Flakes
General Mills 27.8%
Honey Nut Cheerios, Multi Grain Cheerios, Chocolate Cheerios, Cinnamon Chex, Corn Chex, Wheat Chex, Banana Nut Cheerios,  Trix, Golden Grahams, Cookie Crisp, Cheerios, Fiber One, Rice Chex, Kix, Wheaties, Basic 4, Fiber One Honey Clusters, Yogurt Burst Cheerios
PepsiCo 11.8%
Quaker, Cap'n Crunch, Life, Cinnamon Life, Oatmeal Squares
Post Foods 10.0%
Honey Bunches of Oats, Selects Banana Nut Crunch, Selects Blue- berry Morning, Grape Nuts, Shredded Wheat, Spoon Size Shredded Wheat, Fruity Pebbles, Cocoa Pebbles, Post Raisin Bran, Honeycomb, Selects Great Grains
Cookies and Cookie Bars
Top 4 Firms
62.5%

(formerly Kraft) 37.0%
Newtons, SnackWell’s, Teddy Grahams, Barnum's Animals, Lorna Doone, LU Le Petit Ecolier, Chips Ahoy, Oreo, Nilla, Nutter Butter
Kellogg Co. 13.3%
Keebler, Chips Deluxe, Fudge Shoppe, Sandies Pecan, Vienna Fingers, Mother's, Kashi, Murray
Campbell Soup Co. 6.7%
Pepperidge Farm
McKee Foods 5.5%
Little Debbie, Nutty Bar, Fudge Rounds, Choc-O-Jel, Star Crunch
Crackers
Top 3 Firms
76.5%

(formerly Kraft) 33.3%
Ritz, Wheat Thins, Triscuits, Premium, Handi-Snacks, Honey Maid
Kellogg Co. 27.8%
Cheez-It, Keebler Club, Keebler Townhouse, Keebler Toasteds, Keebler Zesta, Carrs, Austin, Sunshine Krispy, Keebler Grahams
Campbell Soup Co. 15.4%

SOURCE: FOOD & WATER WATCH ANALYSIS OF MARKET SHARE DATA, SEE METHODOLOGY ON PAGE 29.
8 Food & Water Watch 
Supermarket Strategies
to Manipulate Shoppers
Most consumers are at least aware that food manufac- turers are competing for their dollars, with an almost constant stream of television, print and social media marketing campaigns designed to drive demand for their largely processed food products. But the marketing doesn’t stop once you get to the store. Supermarkets are designed with one end goal in mind: to sell as much as possible. Every single aspect of the store, from lighting to layout, music to aromas, is manipulated in a way to encourage shoppers to buy more.
In a report subtitled “Capturing a shopper’s mind, heart and wallet,” the Grocery Manufacturers Association admitted that “Retailers and manufacturers realize the store’s potential as a strong marketing medium and
are now targeting shoppers in an effort called shopper marketing.”50 More than half (55 percent) of sales in
a grocery store are unplanned impulse purchases.51 Retailers and manufacturers use every tool they can to make sure that they can control those purchases.
And that doesn’t include the food industry’s over- whelming television, print and social media marketing and advertising campaigns designed to shape consumer demands for processed foods.
Self-Defense at the Supermarket
While supermarkets and food manufacturers spend huge amounts of time and money getting you to spend your hard-earned dollars, there are some things you can do to defend yourself from their pervasive marketing.
Shop the perimeter of the store — In the layout used in most grocery stores, avoiding the middle of the store will not only let you avoid the splashy packaging and marketing for heavily processed food, but also let you focus on more healthful options like fresh produce, meat and dairy.
Shop whole foods —  buying a pre-packaged meal kit, with less sodium and sugars added. And the more steps that food goes through before it reaches you, the more of your dollar goes to the processor, not farmers. This applies to produce, too — pre-cut produce is usually more expensive than buying it whole and cutting it yourself.
Don’t shop on an empty stomach — When you’re hungry, you’ll be more vulnerable to stores’ marketing strategies, such as using bakery aromas, sample stations and prod- ucts placed in end-of-aisle displays and in checkout lines to get you to spend more.
Compare unit cost, not price — Stores can make a particular item stand out with special signs or end-of-aisle displays, but it may still be more expensive than a similar item or a     comparing price per amount of product (per pound or some other measurement).
Take time to look high and low — With the most expensive shelf space at eye level, 
Beware the end-of-aisle display — Supermarkets and manufacturers design fancy displays in the aisle or at the end of the aisle to promote their products, but that doesn’t meant that these items are necessarily a good bargain or discounted in any way. Don’t assume that products in these special locations are the best deal without comparing them to products in the normal location.
If you’re shopping with kids, give them a distraction —- cally to kids, like sugared cereal, will be at their eye level, making sure they’ll ask for them. Bring a snack or a toy your child will enjoy instead.
Make a list. And stick to it! — Food manufacturers and retailers count on impulse purchases and devote much of their marketing to enticing you to buy things that you didn’t plan to get on that trip. The more you plan ahead of time, the less likely you will fall prey to impulse buys.
Grocery Goliaths  9
Sensory manipulation
Shoppers are assaulted with sensory cues designed to entice purchases from the moment they enter the store. Wall colors, pleasing aromas and brighter lighting are designed to increase sales.52 Supermarkets know that music with slower tempos tends to decrease the flow
of store traffic and increase sales volumes. Louder and faster music encourages customers to shop more quickly and purchase less.53 The style of music also has signifi- cant impact. One study found that wine shoppers who heard classical music tended to select more expensive wines and spend more overall than those listening to
Top 40 hits.54 Retailers are attuned to these variables and make sure that their chosen music is appropriate for their store and customer base to manipulate the shopping experience.
Many stores arrange fresh produce and floral displays
at the front of the store to immediately emphasize the freshness and wholesomeness of their products to shop- pers.55 Fresh fruit and vegetable sales typically account for about 11 percent of a grocery store’s revenue,56 but it makes a tremendous impression on shoppers. The bakery department pumps aromas of freshly baked bread to get consumers’ stomachs involved in the shopping deci-
sions, even though most in-store bakeries use prepared foods and frozen dough.57 There are even companies
that specialize in creating these sensory experiences
to encourage customers to buy certain products: they have developed a fresh laundry scent to introduce in the laundry aisle, a coconut aroma to use in travel agency offices to evoke memories of sunny vacations and a citrus scent that can be infused into clothing to evoke a sense of fresh fabrics.58
Product placement
The industry has thoroughly studied the placement of every product to drive shoppers to make more purchases. Supermarkets and manufacturers allocate shelf space, position more expensive products and brands, and place products carefully in relation to one another to maximize sales.59 Key products are placed at eye level, which is a lower shelf for products targeting children.60 The most expensive name-brand products will be found in these spots, and smaller independent brands and private-label products will be found at the top and bottom shelves.
The industry knows every detail of how average shoppers navigate the store and select products: shoppers steer their carts counter-clockwise into the store, circle from the back of the store to the front and typically select items from shelves on their left side.61 These studies help retailers and food companies know where the most lucra- tive end-aisle displays should be placed, and where in the store to put products relative to one another.
Most consumers know that the magazines, candy and personal care products at the checkout aisle are designed to drive impulse purchases. It certainly works. Products displayed at the cash register capitalize on customers’ restlessness and boredom and have much higher sales. One study found that placing an ointment at the cash register instead of on the shelves increased sales by as much as five-fold.62
Shoppers may be unaware that the ends of the aisle displays are not actually a place to highlight special offers, but are highly valued supermarket real estate
that also encourages impulse purchases. More than one-sixth of grocery purchases are tied to brand display advertisements.63 End-of-aisle displays may look like featured sales or discounts, but they’re typically some of the most expensive items — retailers know that singling out their higher priced and popular items makes it harder for shoppers to compare with other products, and leaves consumers thinking they’re getting a deal.64 In fact,
10
Food & Water Watch 
they rarely are. Food companies rent these high-traffic display areas to give their products an edge, and it pays off — 45 percent of all soda sales come from end-of-aisle displays.65
Grocery stores often sell some basic staple foods like
milk and bread at below their cost to try to signal to shoppers that all of their groceries are good values.66
The big grocery chains can offer these popular grocery items at steeper discounts than smaller competitors to lure consumers into the store and then recapture profits by charging more for other products.67 These bargains (known as “loss leaders”) are frequently placed in the back of the store, forcing shoppers to pass more expen- sive processed foods — where the stores’ atmospheric and pricing tricks can strongly encourage impulse purchases of these items.68
Slotting fees and category captains
Some retailers charge food companies a fee (known as slotting fees, slotting allowances or promotional allow- ances) to shelve their products in the most profitable locations.69 These fees are especially prevalent for the introduction of new grocery products and can run over
$2 million for each new variety or brand.70 In 2000, these fees were estimated to cost companies $16 billion, the most recent figure available.71 But between 2010 and 2012, Kroger alone charged companies fees that reduced Kroger’s merchandise costs by about $6 billion annually.72 The largest companies have the easiest time paying these considerable fees, which effectively keep smaller food companies off store shelves.73 In a Federal Trade Commis- sion (FTC) report on slotting fees, smaller suppliers reported that they were “being squeezed off shelves” and that larger producers “will pay large amounts of money to keep everyone else out.”74
Some stores have given control of their shelves to key manufacturers known as “category captains.”75 The category captain is typically a leader in the particular grocery aisle or item (like one of the soda companies for beverages) and the supermarket grants the company the ability to choose what items are available, the placement of brands and varieties, the prices, and promotions that support the products. Many retailers rely on this arrange- ment with manufacturers as the primary tool to manage supermarket shelf space.76
For obvious reasons, category captains have little incen- tive to allow new competitors on supermarket shelves, and they can limit consumers’ choices and increase
prices.77 In 2013, a small competitor sued Nestlé for alleg- edly using its category captain position to exclude other ice cream rivals from shelf space, relegating all smaller manufacturers outside of giant companies like Nestlé (including Häagan-Dazs and Dreyer’s) and Unilever (owner of Ben & Jerry’s, Breyers and Klondike) to a tiny portion of the ice cream aisle.78
Advertising and promotions
The food industry relentlessly markets, advertises
and promotes its products to shape consumer tastes and capture consumers’ grocery dollars. In 2011, food, beverage and candy companies spent $8.4 billion dollars on advertising and media buys, and the four largest grocery retailers, Walmart, Target, Kroger and Safeway, spent a combined $4.4 billion.79
The problem may be even more severe for foods marketed to children. The Journal of the American Dietetic Association reported that considerable research has shown that the foods that are most heavily advertised on Saturday morning children’s television programs are in direct contrast to dietary guidelines, and these foods tend to have high levels of fat, sugars and salt.80 It concluded that 91 percent of these advertised foods were high in fat, added sugars or salt or low in nutrients, based on federal nutritional standards.81 One FTC staff report found that 85 percent of cereal advertisements directed at children were for highly sugared cereals.82 A diet composed of foods commonly marketed to children would consist mainly of cereal and snacks eaten outside of regular mealtime.
Lower-income families are often special targets of the promotional onslaught. Food manufacturers like Unilever, ConAgra Foods and Hormel Foods track sales according to the “paycheck cycle.”83 Even safety net programs like
Grocery Goliaths 
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foodstampscanfattenthebottomlineoffoodmanufac- turers. One industry publication encouraged supermarkets to ensure that processed meals (prepared pasta, dry dinner mixes and frozen dinners) be “available and merchandised at the right time of the month” for food stamp recipients.84 About 85 percent of all food stamp dollars are spent at supermarkets and supercenters, and grocery stores adjust their product offerings, hours and prices to capture the monthly infusion of food stamp benefits.85
Conclusion and Recommendations
Consumers have little chance to make informed decisions and comparison shop in a grocery industry that is domi- nated by big supermarket retailers and food manufac- turers. The FTC is responsible for ensuring that the largest grocery manufacturers and retailers do not use their tremendous size to disadvantage competitors and take advantage of consumers.
Yet the FTC has done little to stop the aggressive consolidation of the grocery sector or the tactics used by grocery retailers to manipulate shopping environments and decrease competition that might lower prices for consumers. And mergers in the grocery retail and manu- facturing sector have been allowed to proceed virtually unchecked.
It is time for regulators to step in to protect consumers and level the playing field to make sure that there is some semblance of competition and a chance for innovative, small or local food companies to get on store shelves. These steps include:
 CongressortheFTCshouldenactanational moratorium on grocery chain mergers, including the host of deals already pending, such as the proposed merger between Kroger and Harris Teeter.




TheFTCshouldrejectmergersorsalesoffood companies or brands that add to consolidation inside the supermarket. The FTC has approved food company mergers unless the firms are rival manufac- turers of specific grocery items, which has allowed food conglomerates to control the overall variety of goods sold in grocery stores.
TheFTCshouldinvestigateanddocumentthe level of consolidation in grocery retailing nation- wide and in metropolitan areas and its impact on consumer choices and prices. Grocery inflation has now significantly outstripped overall inflation and wage growth; the federal government must assess the role of both manufacturing and retail grocery consoli- dation on prices and choices.
CongressmustgranttheFTCsufficientauthority to effectively regulate food marketing, especially to children. Today, Congress has limited the FTC’s authority to restrict food marketing. Congress should provide the FTC with the full authority to regulate food and beverage marketing and give the FTC the authority to create mandatory nutrition standards for food and beverages marketed to youth.
TheFTCmustinvestigateanddocumentthe coordinated practices used by grocery retailers and food manufacturers that act to block new,
local and innovative companies from getting onto supermarket shelves. Common practices that are justi- fied as increasing efficiency (such as shared in-store marketing costs, slotting fees or category captains) only have served to cement the dominance of the largest companies at the expense of the innovation and local food companies that consumers want to see in the grocery store.
12
Food & Water Watch 
Food & Water Watch examined the market share of 100 common grocery food and beverage items (known in the industry as categories) using the most recent data available. Categories were selected to reflect the breadth of foods offered in grocery stores, total sales and consumer use. The over- whelming majority of the data is from the past two years (55 percent from 2012 and 36 percent from 2011), but due to limita- tions in the availability of timely market share data, a small portion came from earlier years for certain grocery categories (8 percent from 2010 and 1 percent from 2009). Market shares for the largest companies were tabulated by aggregating their individual brands; brand shares were available only for the largest brands in any given category, so in some cases there
are fairly small market shares available (in highly concentrated categories like soda and diet soda, the fourth-place firm has a reported market share of about 1 percent or less), but in other categories the smallest brands or company market shares might be higher. The top company market share was calculated by aggregating the top four firms, a common approach in market analysis used by federal regulators and academics to measure economic concentration. Consolidation is sufficiently high in some categories that there are fewer than four competitors
in the entire market; in these cases, we calculated the three-, two- or one-firm concentration level. There were 23 categories with only three major competitors, 14 with two major competi- tors and one category with only one major competitor. Food
& Water Watch included for comparison purposes the super- market brand products (known as private-label products) when these generics made up at least 10 percent of the market. For the five food companies that sell 15 or more examined catego- ries, Food & Water Watch included all the categories even if it was not in the top four manufacturers.
Accounting for recent mergers, acquisitions and spinoffs:
Food & Water Watch adjusted the market shares to account for significant mergers since 2010 by adjusting the most recent data available by the current corporate owner of each brand. The data in this report account for changes in corporate ownership through October 2013. These mergers included all of the transactions included on Table 2 as well as the following transactions: Post Foods’ acquisition of ready-to-eat breakfast cereal from Ralcorp86 and Land O’Lakes joint venture with CalMaine’s Eggland’s Best refrigerated eggs (each received half the Eggland brand market share).87 ConAgra Foods sold Lightlife Foods in September 2013.88 The sale of bakery assets and brands from Sara Lee to Grupo Bimbo and Flowers Foods was based on the value of sales transferred to Flowers Foods as a share of total Sara Lee bakery business (broken down by business line, to the extent possible). In 2013, Dean Foods spun off WhiteWave, which makes Horizon Organic, Silk and other dairy brands.89 Kraft Foods was split into two companies in 2012, with Mondelēz International keeping the cookie, cracker, candy, gum and cream cheese brands and Kraft Foods keeping the remainder of grocery manufacturing.90
Data sources: Food & Water Watch used industry sources to determine brand and category concentration levels including the market research firm Mintel Group’s food market reports (2010 to 2013), the annual abstract Market Share Reporter (from 2010 to 2012) and Grocery Headquarters magazine’s State of the Industry Almanac (April 2013). Generally, these sources rely
on grocery aisle checkout scanner data that is from the major supermarket, drugstore and superstore chains but often does not include Walmart.
Grocery Goliaths 
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Methodology
Endnotes
 
Progressive Grocer. Vol. 92, No. 4. April 2013 at 48.
2 U.S. Bureau of Labor Statistics. Monthly average consumer price

(CUSR0000SA0) and average hourly earnings of private sector pro- duction workers and non-supervisory employees (CES0500000008).
3 Food & Water Watch calculation from Forbes Global 2000 list (DeCar- Forbes. March 17, 2013).  products covered in this report, not just in the United States. Food  Group, General Mills, Kellogg Co., H.J. Heinz, JBS, ConAgra Foods, Tyson Foods, Campbell Soup, Hershey, Hormel Foods, Grupo Bimbo,  Foods and Dean Foods; beverage companies included AB InBev, Coca-Cola, PepsiCo, SABMiller, Grupo Modelo, Dr. Pepper Snapple Group, Molson Coors Brewing, Constellation Brands, Green Moun-  Ahold, Safeway, Whole Foods Market, Delhaize and Supervalu as well   revenues from grocery sales, see note 4).
 
total food and grocery sales from the U.S. Census Bureau’s (Census Bureau) 2012 food and beverage store retail sales of North American  55 percent of Walmart’s total sales going to groceries (both Walmart supercenters and Sam’s Club) and 45 percent of Target’s, as per each Progressive Grocer. Vol. 92, No. 5. May 2013 at S6; Target Corporation. U.S. Securities and Exchange  - able at www.census.gov/retail.
5 Progressive Grocer- ing, March 26, 2013 at 6, Exhibit 13 at 4. Total grocery sales calculated from Census Bureau annual retail sales of NAICS code 445, food and beverage stores.
6 Progressive Grocer. April 2013 at 48.
 
8 Progressive Grocer. April 2013 at 50.
9 U.S. Bureau of Labor Statistics.
10 Food & Water Watch calculation from Forbes Global 2000 list (De- Carlo. March 17, 2013).
 
Washington Post. January 20, 2013; Kaufman, Phil R. U.S. Department -  Agricultural Outlook. August 2000 at 21.
12 Census Bureau. 1997 Economic Census Retail Trade. EC97R445-SZ. October 2000 at 202.
 
Pricing strategies, competition from hypermarkets, and private Journal of Agricultural and Resource Economics. Vol. 36, No. 3.   - Journal of Food Distribution Research. Vol. 39, No. 3. November 2008 at 13.
14 15

 

20
21
22 23

25
26 27 

30 31

Progressive Grocer- Progressive Grocer. Vol. 92, No. 10. October 2013 at 30 and 36.
Progressive Grocer. May 2013 at S-6 and S-8. 
 
Progres- sive Grocer. May 2013.
Progres- sive Grocer. May 2013.
Food & Water Watch calculation from the Census Bureau’s 2012 food and beverage store retail sales; Progressive Grocer, May 2013 at S6;  
Progressive Grocer- ing, March 26, 2013 at 6, Exhibit 13 at 4. Total grocery sales calculated from Census Bureau annual retail sales of NAICS code 445, food and beverage stores.
Food & Water Watch analysis of Metro Market Studies 2012 Grocery Distribution Analysis and Guide.
Kinsey, Jean. Director of the Retail Food Industry Center, University
  04. 1998 at 5; USDA/Department of Justice Workshop on Agriculture and Antitrust Enforcement Issues in Our 21st Century Economy. Transcript. December 8, 2010 at 184.
- Review of Economics and Statistics. Vol. 68, No. 3. August 1986 at 385.
Volpe. Journal of Agricultural and Resource Economics at 488; Volpe,   129. December 2011 at 15.
Kinsey (1998) at 10. Volpe. ERR No. 129 at 16.
- Review of Industrial Organization. 1997 at 360.
  (FTC) Conference on Grocery Store Antitrust. May 24, 2007 at 6.
Carstensen, Peter C. University of Wisconsin Law School. Statement Prepared for the Workshop on Merger Enforcement. February 17, 2004 at 12 to 13.
Ibid. at 12 to 13; Dimitri, Carolyn and Lydia Oberholtzer. USDA ERS. -  1; Howard, Philip H. Assistant Professor, Department of Community, Agriculture, Recreation and Resource Studies, Michigan State Univer-   International Journal of Sociology of Agriculture & Food. Vol. 16, Iss. 1. April 3, 2009 at 16 to 17 and 22 to 23.
  Rigoberto A., Azzeddine M. Azzam and Carmen Lirón-España. De-
14
Food & Water Watch 
partment of Agricultural and Resource Economics, University of Con-

Review of Industrial Organization. Vol. 20. 2002 at 123.
 
2011 at 13.
 
horse meat scandal: a company whose reputation is changed for-
The Independent Chicago Tribune. -  Frozen Food Age New York Times San Francisco Chroni- cle Business Wire Adweek United Press International. September 5, 1984; Mcfee, Cleveland Plain Dealer- Guardian Weekly The Guardian   PR Newswire
PR Newswire United Press International- Adweek. June 27, 1988; Bloomberg Business News New York Times Business Wire. September 11, 1995; United Press Interna- tional Associated Press San Francisco Chron- icle Associated Press Worldstream Business Wire.  Business Wire. July 21, 1998;  Eagle-Tribune Agence France Presse The Guardian  PR Newswire. December 20, 2001; Corporate Financing Week PR Newswire Philadelphia Business Journal.  London Stock Exchange Aggregated Regulatory News Service. August 26, 2010; Stych, Minneapolis/St. Paul Busi- ness Journal. May 1, 2013.
 The Wall Street Journal. August 4, 2011; Kraft Foods Co. Annual Report 2012 at 2.
  Food Processing- Food Processing. August 13, 2012.
 CQ Roll Call 
 FoodBusiness News. August 12, 2013.
 Omaha World- Herald. August 17, 2012.
 -   
  
  
  CNN Money Progressive Grocer
  
  New York Times DealBook. January 3, 2013; Hormel Foods. - 
46 Kellogg Co. Annual Report 2012 at 2; Kashi and Bear Naked packag- - ber 2013; Bear Naked website. Our Story timeline. Accessed October 2013.
47 Kellogg Co. (2012); Kraft Foods Co. (2012) at 2.
48 Connor, John. University of Wisconsin, Madison, North Central

WP-41. March 1980 at 1, 4 and 7.
 
New York Times. February 20, 2013.
 -

51 POPAI at 4.
52 Grocery Manufacturing Association and Deloitte (2007) at 8; Larson,
Journal of Food Distribution Research. Vol. 37, No. 1. March 2006 at 102.
  European Journal . Vol. 16, No. 2. 2007 at 269; Yalch, Richard F. and   Journal of Business Research. Vol. 49. 2000 at 41.
 
on shopping behavior: Classical versus top-forty music in a wine  Advances in Consumer Research. Vol. 20. 1993.
 
Lawrence Journal World. October 27, 2008.
 -

 Economist. December 18, 2008.
58 Economist Financial Times. June 3, 2013.
 
of Exclusionary Arrangements Involving Slotting Allowances and

at 9.
60 Economist-  International Congress on Marketing Trends. Venice, Italy. January 20–21, 2006. European School of Management.
 
Grocery Goliaths 
15
New York Times. August 27, 2013.
 -  Journal of Business Research. Vol. 49. 2000 at 197.
63 POPAI at 5.
 Retailing in the 21st Century: Current and Future Trends Consumer Reports. May 2009.
65 Moss. August 27, 2013.
  - ing Paper No. 313. December 2012 at 20; Chen, Zhijun and Patrick  30, 2010 at 4.
67 Chen and Rey (2010) at 1.
68 Larson (2006) at 102.
69 Gundlach (2005) at 3, 8 to 9.
  
 - cultural and Resource Economics, Food Marketing Research Center. -  1.
 
   February 2001 at 22.
74 Ibid. at 29 and 31.
75 FTC (2001) at 47; Dhar, Sanjay K. et al. University of Chicago Gradu-
 
 
and antitrust implications of category management and category Chicago-Kent Law Review. Vol. 79. 2004 at 1322 to 1323.

 

81
        
- Journal of Public Policy & Marketing. Fall 2003 at 18; FTC (2001) at 51 to 52.
Palm Springs Desert Sun. March 4, 2013.
 Food Institute Report. July 16, 2012; Progressive Grocer. May 2013 at S6.

during Saturday morning children’s television programming are

Journal of the American Dietetic Association. Vol. 108, No. 4. April 2008 at 673 to 674.
Ibid. at 676. 
at ES-3 to ES-4.
Food Institute Report. September 6, 2010.
Shopper Connection. October/November 2010.
Food Insti- tute Report. January 23, 2012.
St. Louis Post-Dis- patch. September 28, 2012.

Mississippi Business Journal. May 1, 2012. 
Omaha World-Herald. September 17, 2013. Denver
Post. May 24, 2013.
Associated Press. October 3, -  October 1, 2012.
}}