Merging Grocery Giants?
Oct 13th, 2022
Both hurdles and opportunities abound as reports indicate a proposed merger involving two grocery store chains which are among the nation’s largest; Kroger and Albertsons. Anti-trust scrutiny is considered a potential problem due to overlap in several markets. Federal regulators may question whether reducing competition would drive food prices higher.
When asked about a possible merger, our Kevin Gade told the Cincinnati Business Courier, “If they were combined, Kroger and Albertsons would move much closer to Walmart in market share.” He also mentioned the value of strong buying power for a larger company, which “should help margins and maybe even the consumer, should these benefits be passed through.” Additionally, Gade believes a deal would enable the two companies to leverage each other’s private label brands which is important as consumers look for cheaper alternatives to national brands.
Gade also expects Federal Trade Commission scrutiny: “We would expect this potential merger to receive a lot of backlash/skepticism regarding whether it helps the consumer. And current mergers are taking longer due to a stricter FTC, so if the two entities are serious about this merger they will need to be prepared to fight this legally for what could be a long period of time.”
Kevin Gade, CFA, CFP®
Chief Operating Officer
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