You may have heard by now that two household names want to merge: Amazon and Whole Foods. You may be happy that two of the companies you frequently buy from will end up together. But this merger might not be what you want it to be.
Effects of the Merger
Amazon’s plans to acquire with Whole Foods is a $14 billion takeover that would combine the dominant online retailing giant with one of the country’s ten biggest supermarket chains. Although this may seem out of the blue, this move has been coming for a while now. Amazon has been expanding into groceries and brick-and-mortar retail stores, and has been wanting to get more involved with the food industry. Amazon, with $136 billion in sales in 2016, wants to grow even more with this deal.
How mega-mergers are hurting everyday people
Higher prices. Less choices. Fewer jobs. More profits for billionaires. Farmers earn less.
When huge companies like Whole Foods and Amazon merge, that means only a handful of food companies are in control of an astonishing share of people’s groceries. Large companies, like Amazon, gobble up smaller brands to secure more profits on supermarket shelves.
While it might seem like there are more options than ever for good groceries, consolidation and mergers means that “natural” brands like Kashi ends up being owned by Kellogg’s, the company that makes Froot Loops.
And while at first it might seem more convenient or even efficient, the hidden costs of these mergers can be devastating. Farmers, small businesses, and even your wallet can end up taking a hit.
The Illusion of “Choice” and the Higher Prices at the Grocery Store
Mergers are a win for grocery chain shareholders but a loss for consumers as prices go up and selection drops. Grocery prices have been rising more quickly than inflation and wages — twice as fast between 2010 and 2012. At the same time, the food, beverage and grocery industries pocketed $77 billion in profits in 2012. So who is really benefitting from these mergers?
To ensure that consumers’ grocery dollars are stuffed into the same billion dollar corporate pockets, many grocery stores maintain the illusion of choice. Multiple companies sell several brands of the same product made by the same company to let you think you have the ability to choose. This is true across the board, including organic and healthy brands are typically seen as independent companies when many are now owned by large food corporations.
“But Amazon is cheap, won’t they make Whole Foods cheaper?”
That is the million dollar question. And the answer is maybe. But who really ends up paying? For product to get cheaper, costs have to be cut somewhere: will farmers be paid less for their product? Will cashiers and other Whole Foods employees be fired? Will Amazon stop deals with small, local farmers because it doesn’t fit their centralized distribution model? In the end, these corporations are only worried about their bottom line -- not the problems they create while trying to make a profit.
What Can We Do? How you can stop this from happening
We’re never going to be able to shop our way out of our problems with the food system. We’ve seen time and again that when huge corporations come together, they’re only interested in one thing: making money. While it might at first seem convenient that Whole Foods and Amazon are merging, we need to make sure that this deal is properly evaluated by federal regulators to make sure it doesn’t make the grocery marketplace even less competitive.
The Federal Trade Commission (FTC) makes sure that the largest grocery manufacturers and retailers don’t use their size to bully smaller businesses and take advantage of consumers. But the FTC has failed by contributing minimal effort to stop a wave of retail mega-mergers. It is time for regulators to step in to do their job: protect consumers and level the playing field.
We can tell the FTC to reject mega-mergers that give all the power to these corporations and make sure that our choices at the supermarket don’t hurt farmers and small businesses.
Melany Rochester is a summer intern at Food & Water Watch.