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Big Supermarkets Kill Your Favorite Products
The biggest supermarkets like to sell their own products.
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Since the early 1990s, supermarkets have been consolidating rapidly., with the top twenty biggest increasing their share of the market from 35% in 1990 to 65% in 2019. There were 300 mergers in this industry just in 2019 alone, as the Department of Agriculture shows in this chart.
So what? Why is this bad?
Well, CNN reporter Nathaniel Meyersohn had an interesting observation from oat milk producer Oatly’s F-1 investor document for its IPO. Oatly’s goal is to sell sustainable food products to address health problems and climate change, starting with oat milk. In its risk factor section, the corporation noted that consolidation is a major risk because it leads supermarkets to reducing the number of brands they carry.
Supermarkets, grocers and other retailers in North America, the European Union and Asia continue to consolidate. This consolidation has produced larger, more sophisticated organizations with increased negotiating and buying power that are able to resist price increases, as well as operate with lower inventories, decrease the number of brands that they carry and increase their emphasis on private label products, all of which could negatively impact our business.
One of the arguments Amazon makes to justify selling its own private label products ahead of the products sold on its platform by third parties is that supermarkets often do this as well. What Bezos and co. leave out, of course, is that the ability to self-preference your own private label product, for supermarkets as well as Amazon, is probably a result of scale and some level of monopoly power.