This has been a big year for retailers, distributors, and brands navigating the economic environment through mergers and acquisitions. These transactions have deep implications for the specialty food industry.
Kroger and Albertsons Merger Still in the Works
In October 2022, two of the country’s largest grocery stores, Kroger Co. and Albertsons Cos., announced their intent to merge, raising concerns from industry stakeholders, national unions, The Federal Trade Commission, and various lawmakers. Both companies hope the $24.6 billion transaction will go through.
In March, The Wall Street Journal explored some of the concerns in an article about how, if approved, the proposed megamerger could redefine what consumers buy at the store. The new source also mentioned that the FTC is examining its potential effects on different revenue streams like online delivery, digital advertising, and pharmacy operations.
On the retailers’ end, Albertsons CEO Vivek Sankaran said at a hearing that the merger was the two companies’ best path to compete against the retail giants Walmart and Amazon. To further assuage doubt, Sankaran together with Kroger CEO Rodney McMullen co-authored an opinion piece in April that addressed some of the concerns surrounding the merger.
The CEOs laid out a plan to divest a portion of its stores to alleviate antitrust concerns. Additionally, they shared that they plan to invest in the stores post-merger to prevent closings. They emphasized that no frontline workers will be laid off, and grocery prices will remain unchanged.
“We will continue to grow our workforce, raising wages and building comprehensive benefits,” Sankaran and McMullen wrote. “We are lowering prices, so customers find the value they deserve. Customers can feel confident we’ll hold ourselves accountable because we have a track record of investments that benefit them.”
A few weeks later, the country’s largest union, The United Food and Commercial Workers International Union, made up of 1.3 million workers in the U.S. and Canada, voted unanimously to oppose the merger.
“Given the lack of transparency, and the impact a merger between two of the largest supermarket companies could have on essential workers–and the communities and customers they serve–the UFCW stands united in its opposition to the proposed Kroger and Albertsons merger,” they said in a statement.
This was followed by the International Brotherhood of Teamsters’ decision to join the UFCW decision to oppose the transaction. The Teamsters represent more than 22,000 employees across both companies.
In September, the companies decided to work with C&S Wholesale Grocers to sell roughly 413 stores, along with QFC, Mariano’s, and Carrs brand names. Stores currently under these banners that are retained by Kroger will be re-bannered into one of the retained Kroger or Albertsons Cos. banners following the close of the transaction.
"We look forward to welcoming thousands of new associates to the C&S family and providing them the opportunity to build long and successful careers," said Eric Winn, COO and CEO of C&S Wholesale Grocers, in a statement.
Kroger also indicated its intention to divest the Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals, and Waterfront Bistro private label brands. The transaction with C&S also provides operational infrastructure including eight distribution centers, two offices, and functional employees.
At the end of November, a resolution to either allow the merger or sue to block it was in sight: the FTC will have until January 17 to make its final decision, according to a court filing. The new deadline caused six U.S. senators, including Elizabeth Warren and Bernie Sanders, to write to the FTC reinforcing how the transaction will hurt consumers, suppliers and workers.
“This divestiture plan will not ameliorate harms to consumers, workers, and the grocery industry as a whole if the merger is allowed,” they wrote in the letter to FTC Chair Lina Khan. “We urge you to oppose this proposed merger, regardless of the proposed divestiture.”
Grocery Mergers and Acquisitions
In January, SpartanNash shared that it acquired independent grocery wholesaler Great Lakes Foods. Included in the agreement terms is the adoption of its 300,000-square-foot distribution center in Menominee, Michigan.
"The location of this distribution center is ideal for serving both new and existing customers in the surrounding communities—as well as our own company-owned stores in the Upper Peninsula,” said SpartanNash EVP and chief strategy and information officer, Masiar Tayebi, in a statement.
The next month, Hy-Vee followed suit by purchasing the single-unit North Scott Foods from owner Steve Grolmus. Grolmus announced his intention to sell the store following his retirement. Like Hy-Vee, Hannaford also acquired a single-unit neighborhood market in Blue Hill, Maine called Tradewinds Marketplace after its owners, Chuck and Belinda Lawrence, decided to retire.
“A lot of the values we have, we got from Hannaford. As we considered retirement, it became evident that there was really only one successor that would maintain the same great service and provide the products our customers have enjoyed since we opened,” said Tradewinds Marketplace Owner Chuck Lawrence, in a statement.
Sprouts Farmers Market in March shared that it acquired two independently owned stores in Chula Vista, California that were operating under the Sprouts name. This was a large step for the company because it meant that Sprouts regained complete control of its brand.
In May, A Kearny, New Jersey ShopRite was acquired from the Tully Family along with Tully ShopRite Liquors by New Jersey-based Nutley Park ShopRite. This move was made following the retirement of owner Richard Tully.
In a pivot from retailer to wholesale, Save A Lot agreed in August to sell its 18 remaining stores to Leevers Supermarkets, a Save A Lot retail partner with 29 stores across the U.S. The company’s transition into a wholesaler began in late 2020. While no longer operating stores directly, the company will continue to partner with individual retail partners like Leevers across its network to provide a base for testing new innovations and programs before deploying them to all stores, according to Save A Lot.
Less than a week later, Aldi also announced a large-scale merger decision to expand in the Southeast region of the U.S. The discount grocer shared its intention to purchase 400 Winn-Dixie and Harveys Supermarket locations across Alabama, Florida, Georgia, Louisiana, and Mississippi.
"The time was right to build on our growth momentum and help residents in the Southeast save on their grocery bills. The transaction supports our long-term growth strategy across the United States, including plans to add 120 new stores nationwide this year to reach a total of more than 2,400 stores by year-end,” said Jason Hart, CEO of Aldi, in a statement.
Coinciding with Aldi’s announcement, Casey’s General Stores also shared that it acquired 63 convenience stores from EG America, a subsidiary of EG Group Ltd., an independent convenience retailer. The stores are in Kentucky and Tennessee and operate under the Minit Mart and Certified Oil banners. Keeping up with the momentum Casey’s also said it would acquire 22 Lone Star Food Stores locations in Texas a few months later.
Casey’s noted that the Lone Star transaction would serve as a springboard to growth within Texas.
Later in November, Wonder Group, an at-home dining and food delivery company, shared that it successfully purchased meal delivery kit Blue Apron for $103 million. Wonder noted that the transaction will help support its creation of a mealtime "super app" that offers a range of dining occasions and features foods from top chefs and restaurants.
In another November online grocery store transaction, ultrafast delivery platform Getir shared that it purchased Ahold Delhaize USA subsidiary FreshDirect. The retail giant decided to sell the grocery business to focus on its omnichannel strategy.
“This was a difficult decision, especially given FreshDirect’s rich history in the New York City area,” said JJ Fleeman, CEO of Ahold Delhaize USA, in a statement. “However, our strength as a grocery retailer in the U.S. is the true omnichannel experience–a combination of online and in-store–where we have leading brands and market share, strong store density and online presence, and a deep heritage of customer loyalty and relationships. With this decision, we will increase our focus on omnichannel–our biggest growth opportunity.”
Distributor Merger and Acquisitions
It wasn’t only a big year for retailers, many distributors also worked together to ensure success.
In May, US Foods indicated plans to acquire Renzi Foodservice, a broadline distributor in Watertown, New York. According to US Foods, the acquisition will allow it to expand its presence in New York, an area where it lacks a distribution center.
“We look forward to welcoming the Renzi team to US Foods as we continue to deliver on our long-range plan and enhance our position with new and existing customers throughout the region,” said US Food CEO Dave Flitman in a statement.
One month later, KeHE acquired DPI Specialty Foods, a distributor in key geographic locations throughout the Western U.S.
The transaction broadens KeHE’s customer base and bolsters its existing warehouse infrastructure, shared KeHE. The combined capabilities include over 31,000 customers, more than 80,000 SKUs, 6,100 suppliers, and 7 million square feet of warehouse space across all temperature zones in 19 distribution centers.
In August, specialty food purveyor Roland Foods acquired IfiGourmet, an importer and distributor of bakery, pastry, confectionery, and ice cream products. IfiGourmet was combined with AUI Fine Foods, Roland Foods’ sweets division. The company's owner and CEO Rick Brownstein remained with the company.
This strategic acquisition will strengthen AUI Fine Foods’ footprint in the key Chicago and San Francisco markets and expands our sweet product offering, which will allow us to better serve existing and new customers nationwide,” said Keith Dougherty, CEO of Roland Foods, in a statement.
The month after, food technology company GrubMarket acquired Mendez International, a distributor of tropical fruits sourced from Costa Rica, Ecuador, the Dominican Republic, and Jamaica.
As a part of GrubMarket's portfolio, Mendez International has access to the food tech company’s WholesaleWare software suite, a software-as-a-service platform that provides food industry wholesalers and distributors financial management, sales and online ordering features, inventory management, lot traceability, grower accounting, and automated routing and logistics, as well as Orders IO, GrubMarket's mobile ecommerce solution.
Brand Merger and Acquisitions
Specialty makers and national brands alike analyzed their operational strategies and made strategic transactions throughout the year.
In April, Colavita acquired California-based O Olive Oil and Vinegar. After the acquisition, Colavita named Paolo Colavita as CEO of the O brand. The next month, hot sauce and pasta sauce maker Dave’s Gourmet purchased specialty condiment and chutney company Le Bon Magot. Food entrepreneur Naomi Mobed launched the brand.
“We are thrilled to be able to take Naomi’s vision for quality, authenticity, and unique products to our network of retailers to gain new distribution and make these amazing products more accessible to consumers,” David Neuman, CEO of Dave’s Gourmet, said in a statement. “We simply love her products and the brand, and we have big plans for expansion.”
In a transaction at the national scale, Unilever agreed to acquire the frozen Greek yogurt brand Yasso in the U.S. The acquisition aligns with Unilever Ice Cream Business Group’s “premiumization” strategy, where it seeks out high-quality offerings for its portfolio, according to the company. Yasso joins other premium brands including Ben & Jerry’s, Magnum, and Talenti.
In step with a national brand acquiring a household premium product, Campbell Soup and Sovos Brands, Inc., parent company of soup and sauce brand Rao’s, shared in August that Campell would acquire Rao’s for $2.7 billion.
According to Campbell, the strategic transaction adds a high-growth portfolio of brands to diversify Campbell’s meals & beverages division. The company added that this decision provides a path for sustained profitable growth.
The next month, J.M. Smucker said that it entered into an agreement to acquire Hostess Brands, Inc. for $5.6 billion. This includes Voortman cookie brands, various global manufacturing facilities, a distribution center in Kansas, and the Hostess Brands sweet baked goods brands: Hostess Donettes, Twinkies, CupCakes, DingDongs, Zingers, CoffeeCakes, HoHos, Mini Muffins, and Fruit Pies.
The acquisition expands the company’s offerings in growing categories and highlights its focus on convenient consumer occasions, according to J.M. Smucker Co.
In another transaction related to J.M. Smucker, Second Nature agreed to acquire Sahale Snacks from J.M. Smucker for $34 million.
Sahale is a manufacturer and marketer of premium nut and fruit snack mixes, sold across the U.S. and internationally under the Sahale Snacks brand. The transaction will include all trademarks, as well as the Sahale Snacks leased manufacturing facility in Seattle, Washington. That transaction is expected to close April 30, 2024.
In October, Ferrrara Candy, maker of Ferrero Roche, agreed to acquire iconic jellybean brand Jelly Belly. Although financial terms were not disclosed, the transaction is expected to close by the end of the year.
The proposed acquisition would combine Jelly Belly’s jellybeans and specialty confections with Ferrara’s portfolio of sugar candies. Once the acquisition closes, nearly 800 global Jelly Belly employees and its facilities in California, Illinois, and Thailand will join the Ferrara organization. Jeff Brown, current EVP of global operations and distribution of Jelly Belly, will become the company’s CEO.
Most recently, Chobani shared that it acquired La Colombe for $900 million earlier in December.
"At a time where the industry has faced challenges to grow sales, Chobani has delivered double-digit, volume-led sales growth, and considerable margin expansion. We have never been stronger or better positioned to chart our next chapter of growth," said Chobani founder and CEO Hamdi Ulukaya, in a statement. "We've already made an investment in the coffee category with our creamers and are excited about bringing La Colombe into the Chobani family, and offering the delicious, high-quality cold brew and ready-to-drink craftmanship of La Colombe to a next generation of consumers.”
Related: Chobani Acquires La Colombe; Honoring the 2024 Leadership Award Winners