Billion $ Industry, and the 12 companies that own most of it.
When you walk into a grocery store you see A LOT of products! But the companies that provide these options are actually quite few.
Because food is so integrated into our everyday lives and into our mental, physical and gut health, it's important to know who manufactures what you consume and even what they value. After all, what you eat everyday has long-term health outcomes.
When you buy about 80% of of your groceries, chances are you're supporting one of these companies:
- Procter & Gamble
- General Mills
Think of these companies like the "Apple" of phones. However, you may not see “Unilever” under a brand label. These large conglomerates operate under different brand names.
Due to the substantial footprint these large food industry organizations have on our world they have an impact on working conditions, environment, and even our own diets! We'll continue to discuss these food-industry related topics on our blog, but for now, we're focusing on the pros and cons of industry leaders owning the market.
99% of small businesses haven’t reached you yet.
Justin’s nut butter (who started at farmers markets just like us) was a pioneer in the natural nut butter space (thanks Justin!) and in 2013 they sold to Hormel, the same company that owns Skippy. Ben & Jerry’s Ice Cream (shoutout to Jerry who has been a mentor of ours!!), is owned by Unilever, the same company that owns Breyers Ice Cream. Kellog’s who owns Froot Loops and Pringles, also owns more health-oriented brands like Kashi, Bear Naked Granola and RXBar. RXBar started with $10,000 and sold to Kellog for $600 million! If you’re a small biz, isn’t that a dream come true? Let’s take a closer look.
Agriculture, food and related industrialization contributes to 1 trillion to the U.S. Gross Domestic Product.
The grocery/food retail space is competitive due to shelf space, cost of entry, limited materials and cost commodities. You can read more about what it takes to grow in the food industry here. Where there is competition, there is also high demand. In fact with an 11.9% share, food ranked 3rd—behind housing (34.9%) and transportation (16%)—among the expenditures of the average U.S. household in 2020. Because of the highly competitive, and high demand factors, scaling nationally requires thousands, often millions of dollars in capital.
Big companies give small brands a chance.
Small food businesses often start off small or hope to stay local, or regional, but with a clear and working business model, vision and funding, grow nationally. It’s pretty rare to “make it” in this sense. In fact, most small companies don’t but if they do, does “selling out” mean compromising quality? On one hand it’s a great thing that start-ups make it big! It means product innovation and diversifying the food landscape: a bonus for consumers. Many of the great products we enjoy now had to be bought by bigger companies in order for us to have access to them.
On the other hand, the question is, can the quality of the food and the integrity of its mission and values remain as it grows? Without the smaller company controlling the supply-chain, can we ensure that ingredients, sourcing, and its branding are still upheld?
Ben & Jerry's vs. Justin's
Ben & Jerry’s, who are infamous not only for their ice cream but for taking a stand on social justice issues, is a great example of this. While they started off in one store in Vermont growing eventually to regional distributors then caught the eye of Unilever. Part of the deal is that Unilever owns the brand, but Ben & Jerry are still the representation of it. This means that when Ben & Jerry want to pull out of a region due to political conflict, they can. The social mission and vision of Ben & Jerry’s has remained despite their ownership changing. For example, Ben and Jerry’s took a strong stance against racial inequity and LBGTQ+ rights in light of political events. They even took a sales hit in 2021 when they decided to pull out of the West Bank and Gaza Strip; boldly stating "we believe it is inconsistent with our values for Ben & Jerry’s ice cream to be sold in the Occupied Palestinian Territory (OPT)."
On the other hand, Justin’s Nut Butters, with Hormel's acquisition, was quick to change their recipe in order to mass produce. This meant adding palm oil, a common household and food-industry additive that acts as a natural emulsifier: keeps the oils from separating in natural nut butter spreads but has also been a leading cause of deforestation. Palm oil, coming from the fruit of palm oil trees found in rainforest climates, is also home to to numerous plants and animals, such as orangutans, Sumatran tigers and Bornean rhinos. The destruction of these natural habitats endangers plants and animals, causing loss of biological diversity.
Benefits and Disadvantages to a Company's Growth within the Food Industry.
Companies who manage to grow through their own funding, marketing and sales, can gain enough traction to be acquired and added to their “family” of brands under the original small business label.
While sacrificing product quality and brand mission/vision can be a downside to growth, accessibility to products not otherwise made possible and even product innovation can make joining the top 12 worth it.
The best way to contribute to innovation within the food industry? Reading this blog, of course ;) And buying from values-aligned brands. Thank you for being here, Americano!
We're not anti-corporation, we are pro-transparency. How food affects your long-term health, where food is coming from and even how your values align with the organizations that manufacture what nourishes you should be as clear as day. That’s in part why we started “Thoughts from the Peanut Gallery.” psst...In another article we discuss the evolution of a startup business in the food industry, in this article we talk about the existing food industry.
References and Resources:
The many health risks of Processed Foods. LHSFNA. (2022, February 1). Retrieved February 17, 2022, from https://www.lhsfna.org/the-many-health-risks-of-processed-foods/#:~:text=Heavily%20processed%20foods%20often%20include,high%20blood%20pressure%20and%20diabetes.
Gartner_Inc. (n.d.). Ben & Jerry's serves up Social Justice. Gartner. Retrieved February 17, 2022, from https://www.gartner.com/en/marketing/insights/daily-insights/ben-jerrys-serves-up-social-justice
Mattison, L. (2021, July 6). The 10 food companies that own almost every food brand. Wide Open Eats. Retrieved February 17, 2022, from https://www.wideopeneats.com/biggest-food-companies/
KevinWilliamB. (2017, October 11). Rxbar CEO after $600 million buyout: 'I have financial freedom'. CNBC. Retrieved February 17, 2022, from https://www.cnbc.com/2017/10/11/rxbar-ceo-after-600-million-buyout-i-have-financial-freedom.html
Mari Fletcher Mari Fletcher Community Member • points posts comments upvotes FollowUnfollow, Meagan Leigh Meagan Leigh Community Member Retrieved February 17, 2022, from https://www.boredpanda.com/grocery-store-american-food-section/?utm_source=google&utm_medium=organic&utm_campaign=organic
These 11 companies control everything you buy - capital one shopping. capitaloneshopping.com. (n.d.). Retrieved February 17, 2022, from https://capitaloneshopping.com/blog/11-companies-that-own-everything-904b28425120
Rainforest Rescue. Questions and answers about palm oil. Retrieved September 1, 2022 https://www.rainforest-rescue.org/topics/palm-oil/questions-and-answers