Opinion

Who Owns Your Grocery Store?

In the age of monolithic grocery giants, food co-ops offer a promising alternative.

By Jon Steinman 28 Jul 2017 | TheTyee.ca

Jon Steinman is currently running a crowdfunding campaign to support the development of the book, Grocery Story – The Promise of Food Co-ops in the Age of Grocery Giants. Jon is also the writer and host of the Deconstructing Dinner television and radio series.

Who owns the grocery store you shop at?

I love this question. It’s a bloody important one, a solid entry-point into a much deeper inner dialogue about the type of food system we choose to invest in each time we pass through the grocery checkout. If you’re like most Canadians, your investment is probably not so much a choice but an exercise in necessity, habit or convenience. Most of us, after all, are sorely limited in choosing which among the country’s grocery giants our food dollars will support.

The national market share of Canadians’ grocery dollars is telling, with 30 per cent of us investing our food dollars in Loblaw Companies Ltd., 26 per cent in Sobeys (Empire Company Ltd.), and 25 per cent in Metro, Walmart or Costco combined. That’s right, over 80 per cent of Canada’s grocery dollars end up in the pockets of only five companies.

In Western Canada, Jim Pattison and his Overwaitea Food Group is high on that list too. In Vancouver, if you shopped at the once locally owned Capers Markets, your food dollars in the past 10 years have been an investment in Whole Foods. If the recent $13.7-billion acquisition of Whole Foods is approved, you’ll soon become an investor in the Amazon empire.

This eroding of competition among the grocery giants also mimics the (un)competitive landscape of the foods found on their shelves. In their “Grocery Goliaths” report, U.S. NGO Food & Water Watch refers to the companies supplying the stores as the “Monolithic Food Manufacturers.” Indeed they are. Today, two companies hold 99 per cent of the sports drink market, 80 per cent of the mayo market, and 85 per cent of dry mac and cheese. Three companies retain 96 per cent of the market for baby formula, 80 per cent for granola bars and 77 per cent for ketchup. In a third of the categories researched, the report found four or fewer companies controlled at least 75 per cent of sales. The figures are almost Orwellian.

How have these monolithic manufacturers amassed such concentration? Simple. They pay for it.

Food manufacturers across the globe are shelling out $50 billion a year in trade fees and discounts — requirements established by the grocery giants. In the U.S. alone, these “trade fees” have been estimated at $18 billion. The deeper the pockets of the manufacturer, the better the chance that the grocery gatekeepers will grant the manufacturer access to the eating public. Perhaps the most dubious of the fees are the slotting fees, where a manufacturer pays the retailer to place their product on their shelves. Once there, the retailers provides little guarantee that the product will remain. To assure long-term placement, manufacturers shell out a “pay-to-stay” fee.

It matters little to the retailer if the product is unhealthy, lacks innovation, or carries a heavy environmental footprint — the foods on our grocery store shelves are reserved for the highest bidders. As one report on slotting fees writes, “Supermarkets today are as much about selling shelves to food companies as they are about selling food to customers.” An article in the Economist captures it best, “So lucrative have slotting fees become, that industry insiders joke that supermarket shelves are now the world’s most expensive property.”

So what’s wrong with this eroding of competition in the marketplace?

For me, it’s the impact the hollowing out of options has on my local economy and how it prevents the local food butchers, bakers and kombucha-makers from accessing the shelves of local and regional stores. These good-food innovators deserve access to the marketplace. They are the entrepreneurs who are transforming the food supply, but they are no match for the flexed muscle of a new flavour of Doritos.

In my hometown of Nelson, B.C., any investment in the three largest grocery stores results in my community lining the pockets of the second, fourth and 21st richest Canadians. Not surprisingly, none of these grocery tycoons live anywhere close to Nelson. Why do we allow our local economy to be controlled remotely by a handful of companies run by people who would likely struggle to even find Nelson on a map?

There are alternatives. We can plant a garden, raise some chickens, flock to the farmers’ markets or shop at one of many specialty food stores. I love all of these options. But are they alternatives spelling the end of the grocery store? Not at all. Despite the exciting growth of these more direct forms of food access, 94 per cent of our food dollars continue to end up in the hands of food retailers.

So what are we to do?

The history books are full of examples of efforts to combat the concentration of wealth and power within the grocery sector. At times, this exercise in resistance has spanned the spectrum of back-to-the-land homesteaders at one end, to the president of the United States at the other.

“Which do you want? Do you want to live in a town patronized by some great combination of capitalists who pick it out as a suitable place to plant their industry and draw you into their employment? Or do you want to see your sons and your brothers and your husbands build up business for themselves under the protection of laws which make it impossible for any giant, however big, to crush them and put them out of business.” That was then-to-be president Woodrow Wilson, speaking during his election campaign of 1912.

By 1934, the groundswell of resistance in the U.S. to the rise of chain stores had resulted in 17 states implementing chain store taxes. In the grocery sector, much of the resistance was in response to the spread of the largest of the grocery giants, A&P, who at the time had assumed 16.7 per cent of the American grocery market. Despite intense opposition to it, anti-trust legislation succeeded in holding back mergers and preventing the demise of many locally owned food-based businesses. By the early 1980s, these agencies and their requisite powers were severely eroded, their powers reserved for only the most egregious of anti-competitive activity. The great mergers of the 1980s and 90s ensued.

The resistance among consumers was not, however, extinguished.

One of the most under-appreciated responses to this concentration of wealth and power were the hundreds of communities that organized themselves to take back control of their local economies and food supply. They did this by forming food buying groups and retail food co-ops. The first wave of these consumer-owned stores emerged in the Depression era, but it wasn’t until the early 1970s and a new wave of community-owned grocery stores did the inspiring food co-op movement of today really take shape. These co-ops were primarily focused on sourcing organic foods and exercised their collective buying power to keep prices low for their member-owners.

Here in B.C., the most organized of these efforts was Fed-Up Co-operative Wholesale, formed in 1972 by the CRS Workers’ Co-op. By 1973, Fed-Up was providing wholesaling services to 50 pre-order food co-ops operating throughout the province. In the U.S., efforts were more widespread, with buying groups and formal co-ops mushrooming across the country. The Minneapolis-St. Paul area was a hotbed of co-op activity, and today has become home to about 13 food co-ops, many of which operate multiple locations. Back in B.C., two of those early co-ops in particular stood the test of time and today are known as the East End Food Co-op in Vancouver and the Kootenay Co-op in Nelson. Both co-ops are 42 years old.

851px version of Kootenay Co-op
Last year, Nelson’s Kootenay Co-op purchased $3.5 million in products from local suppliers. Photo by Jon Steinman.

Today, the retail food co-op model is a definitive movement, with over 300 stores operating across the U.S. and many national and regional organizations supporting their development. The natural food co-ops in Canada never took hold to the extent they did across the border, but a new wave of interest is forming, particularly in Ontario where the Ontario Natural Food Company (1975) has been helping usher in a flurry of new food co-ops. Some of these co-ops already have a few years under their belt like the West End Food Co-op in Toronto, the Mustard Seed in Hamilton and Eat Local Sudbury Co-op in Sudbury.

Here in Nelson, I’ve been a member-owner of the Kootenay Co-op since 2006. Like at any consumer co-op, once a year I gather with my fellow co-owners to elect from among our 14,000+ members, a group of us to lead the store on our behalf. When I have a question or concern about an existing product or a request for an item not yet on the store’s shelves, my grocery store listens with earnest and eager attention. I know the names of most of the people who work in the store and I recognize half of the shoppers each time I pass through the automatic sliding doors. The same energy and social engagement that attracts me to the busy farmers’ markets is the same incentive that draws me into my grocery store. My grocery store is my community.

Last year, the Kootenay Co-op purchased $3.5 million in products from local suppliers, and I’m not referring to the appropriated version of “local” used by the chain stores that now use it to describe any food produced in the province. The Kootenay Co-op’s “local” is specifically defined as being from within the West Kootenay region of the province. In an act of defiance and pride, the co-op appropriately labels these foods as “True Local.”

Not surprisingly, the hundreds of natural food co-ops in North America, which, for years had easily differentiated themselves from their conventional counterparts, are today facing new pressures from the national and multinational chains, not to mention the recent emergence of regional chains specializing in foods that were once characteristically “co-op.” The fear among co-ops of this new competition is palpable, but there are quite a few characteristics of food co-ops that conventional stores will never match.

Food co-ops are democratic: Any member of the co-op can run for the board of directors and all members are invited to vote for their board each year.

Local head-office: The entire management team running a food co-op is local. No one is calling the shots from Toronto, Nova Scotia or Arkansas. In turn, cooperative grocery stores employ more people than privately owned ones. With 160 employees, the Kootenay Co-op, as one example, has become Nelson’s largest non-governmental employer (population of Nelson: 10,250).

Profits remain with the co-op: Any profits generated by a food co-op are either re-invested back into the co-op and/or distributed equitably among member-owners. If you hear anyone alleging that a food co-op is gouging its members, it’s simply not possible. The financial success of the co-op benefits the entire membership and co-ops are in the business of providing the best prices to their members while ensuring their suppliers are fairly compensated and the products carry the least environmental impact.

More immune to takeovers: Amazon’s pending acquisition of Whole Foods is a reminder of the risk inherent when people rely too heavily on privately owned grocery stores. Indeed, Whole Foods is no mom-and-pop retailer, but as conscientious as any privately-owned, independent local grocer might be, any possible takeover of their store(s) by the hungry giants is a decision that is entirely their own; it’s not one that requires approval of the store’s shoppers as is the case with a food co-op.

In Canada, support for start-up food co-ops is lagging, but between a number of organizations in the U.S. and the many co-op development agencies across Canada, the resources are certainly there for those wishing to organize their own community-owned grocery store. There are also existing food co-ops to learn from and one of the core principles of cooperatives is to cooperate among each other. With hundreds of these stores in rural and urban communities alike, there is no shortage of co-ops to reach out to and lean on.

Before hitting the ground running, what might be a first critical step in becoming a participant in the food co-op movement is to support the shift within the collective conscience of eaters, of how we perceive the existing grocery stores operating in our neighbourhoods. Just like the buying groups of 1970s B.C., it’s likely necessary for each of us to first arrive at that place of being downright fed-up with the companies currently feeding us. Then the work can really begin toward democratizing our local economy and democratizing our grocery stores.  [Tyee]

Read more: Food, Labour + Industry

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