Merger Mania Spring Updates

2015 is shaping up to be the year of food mega-mergers, which is bad news for consumers. Recently, Hormel announced its intention to acquire Applegate Farms. Over the years, Food & Water Watch has intervened in several of these deals to let shoppers know these mergers impact their wallets. It is difficult for most people to stay up to date on the host of changes sweeping through the food and agribusiness industry, so here are a handful of updates on some recent deals, long-standing food antitrust cases and a few rumored mergers.

Heinz-Kraft: In March, Kraft and Heinz announced merger plans to create the third largest food company in the United States and the fifth largest in the world. This merger would lead to huge changes in the food processing industry in the form of “synergies,” which is corporate speak for shuttering plants and laying off workers. These corporate abuses are not just hypothetical. The Commodity Futures Trading Commission recently charged Kraft and its spinoff company Mondelez with manipulating the wheat market to lower their costs and increase profits. And that was before this deal, which makes them even bigger and in control of more sections of the grocery store.

Monsanto-Syngenta: Earlier this month, genetically modified seed monstrosity Monsanto tried to acquire Syngenta, one of its closest competitors. Syngenta has so far rejected the offer for what would have been the largest agribusiness merger ever, but Monsanto is continuing to pursue the company. If Monsanto does acquire Syngenta, it would control almost half of the U.S. corn seed market and half of the market for the chemical herbicides used on those seeds. That doesn’t even include Monsanto’s numerous licensing deals allowing other companies to use Monsanto’s genetically engineered traits. Monsanto claims it would sell off Syngenta’s seed segments in the acquisition, but, even more troubling, that means the real goal of the acquisition may be to snap up Syngenta’s numerous herbicides. This could be an attempt to expand Monsanto’s chemical empire, since its blockbuster weed-killer Roundup no longer works as effectively as it once did, due to the spread of Roundup-resistant superweeds.  

Giant-Food Lion grocery stores: Hot on the heels of the recent Safeway-Albertsons merger, two European based supermarket giants with large U.S. operations confirmed that they were in the early stages of merger discussions. This proposed merger would create the fourth largest supermarket chain in the United States and would be the largest global supermarket merger in almost a decade. Ahold, a Netherlands-based company, owns several large grocery store chains on the east coast including Giant and Stop & Shop, and Belgium-based Delhaize owns Food Lion and Hannaford, two other sizable east coast supermarket chains. The results are yet to be seen, but if the other supermarket mergers are any indication, shoppers will not be the winners in local markets with fewer competitors selling groceries.

Sysco-US Foods: Sysco, the United States’ largest food service distribution company, tried to acquire its only other major competitor, US Foods, at the end of 2013. In a shocking move, the Federal Trade Commission sued to stop the merger. Food & Water Watch has worked to oppose this merger since early 2014 and it appears, in this case at least, that federal antitrust officials are not rushing to rubber-stamp this particular deal. The merger, if allowed, would ensure that Sysco maintains its position as the single dominant company in the food service industry, controlling over three-quarters of the U.S. market serving restaurants, cafeterias, stadiums and other institutional foodservice locations. The case is currently in administrative court hearings that may ultimately decide whether the merger will go through or not. It bears repeating that this merger would make Sysco the only national food service distributor of its kind.

Post-MOM Brands cereal manufacturers: In early May, the breakfast cereal company Post Foods completed its acquisition of rival MOM Brands, without intervention from the FTC despite heated opposition to the deal from advocacy groups including Food & Water Watch. Post cereals include Honey Bunches of Oats, Grape Nuts and Fruity Pebbles, and MOM Brands was a major manufacturer of more affordable off-brand versions of the top name-brand cereals, including some of Post Foods’ own products. This brings together the third and fourth largest cereal companies in what was already an extremely consolidated section of the grocery store. It also removes the most affordable brands as competitors, allowing the top brands to set their own prices, significantly affecting shoppers.

Hormel-Applegate: Hormel, manufacturer of the infamous meat product Spam, is buying Applegate, the leading producer of organic and “natural” meat products. With a $775 million purchase price for Applegate, this deal would be Hormel’s largest acquisition. Applegate supports reduced antibiotic use in meat production and GMO labeling. Hormel, however, does not. With this deal, Hormel absorbs not only a new product line, but also a political opponent. Applegate’s customers also may not appreciate their food dollars going to a parent company that advocates against the positions that Applegate has built its reputation on. It’s just the latest example of how this extremely consolidated industry makes it hard to shop our way to a better food system.

Food & Water Watch will continue to keep you up to date as these and future mergers unfold.