Bad news for snack food lovers: Salty treats king Snyder’s-Lance has announced plans to buy Diamond Foods, owner of Emerald Nuts, Pop Secret brands and up and coming potato chip brand, Kettle. This merger will limit consumer choice, hike prices and feed the ever-ravenous Foodopoly.
Snyder’s-Lance owns a number of well known snack food brands like Snyder’s pretzels, Cape Cod potato chips, Pretzel Crisps, Archway cookies and Stella D’Oro processed baked goods, among others. This merger, if approved, will extend the company’s control of the snack food aisle, doubling Snyder’s market share in potato chips and pushing it into fourth place.
Food companies have been trying to keep ahead of consumer demand for healthful, natural foods. This could raise the bar on what people are eating – but only if competition keeps the market dynamic with plenty of true options for consumers, a goal often at odds with food company mergers.
Diamond has prioritized adding certified non-GMO labels across all its brands, a decision it says has gone well so far. With this acquisition, Snyder’s-Lance is capitalizing on consumer demand by bringing these brands under its umbrella. But will the innovation started by Diamond continue under its new parent company?
CNBC has already stated that this merger makes the company better suited for further acquisitions by even bigger companies, such as Mondelez and PepsiCo.
In today’s Foodopoly, big companies have too much market share and therefore power in deciding what we eat, most of the time without consumers even knowing it. The largest companies own brands found in multiple sections of the store, under many different brand names, with no clear link to the parent company. This is especially damaging to consumers who try to choose independent brands. There are fewer and fewer choices, and there is less room in the market for smaller brands to compete.
Hyper-consolidation throughout the American economy is contributing to sharply-rising economic inequality. Mergers may help larger, more powerful companies earn up to 10 times more than typical firms, according to a recent study. As the consolidated companies (and executives and investors) earn more, the gulf between them and everyone else gets wider. This seems pretty obvious—bigger companies keep more of the pie for themselves. This mirrors a 2010 Food & Water Watch study that found that consolidation in the pork processing industry was sapping economic vitality and increasing economic inequality in rural Iowa counties.
This week, a New York Times editorial highlighted the damage consolidation and merger-mania inflict on the economy. Mergers are eliminating competition and raising prices throughout industries including airlines, health care, retail, communications and food. Bigger companies can raise prices, and since consumers have fewer alternatives, we pretty much have to pay more. The Times also put its finger on the culprits: Federal antitrust authorities have approved so many mergers that now only a few large firms control swaths of the economy.
This latest merger shows, once again, that we simply cannot “shop our way out of it”— we need to demand that regulators actively prevent the hyper-consolidation of the food industry.