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Washington AG Sues to Block Kroger-Albertsons Merger

Washington State Attorney General Bob Ferguson has filed a lawsuit to block the proposed Kroger-Albertsons grocery merger. Ferguson asserts the proposed merger of the two largest supermarket companies in Washington state will severely limit shopping options for consumers and eliminate vital competition that keeps grocery prices low.

Ferguson also asserts that a proposal by Kroger and Albertsons to mitigate the impacts of their merger, which includes selling off more than 100 stores in Washington, does not change the fact that Kroger would still enjoy a near-monopoly in many markets in the state. In addition, the plan to sell the stores to a company that is primarily a wholesale supplier could set up many of the divested supermarkets to fail, endangering Washington jobs and further diminishing choices for Washington shoppers.

“This merger is bad for Washington shoppers and workers,” Ferguson said. “Free enterprise is built on companies competing, and that competition benefits consumers. Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store. That’s not right, and this lawsuit seeks to stop this harmful merger.”

The lawsuit, filed today in King County Superior Court seeks to block the merger of Kroger and Albertsons nationwide. Ferguson asserts the merger eliminates Kroger’s closest competitor and decreases customer choice by significantly increasing the concentration of stores owned by the same company throughout Washington.

Even company executives have expressed that the merger might be illegal. After rumors of the proposed merger surfaced, a vice president with Albertsons wrote that “you are basically creating a monopoly in grocery with the merger… [it] makes no sense.”

An Albertson’s human resources director wrote of the merger: “It’s all about pricing and competition and we all know prices will not go down.”

Kroger and Albertsons are the two largest supermarket chains in Washington and the second and fourth largest supermarket operators in the country. They currently have more than 700,000 employees in nearly 5,000 stores across 49 states. They have combined annual revenue in excess of $200 billion.

Kroger alone has more than 21,000 workers in Washington.

Companies own more than half of Washington supermarkets

More than half of all supermarkets in Washington state are owned by either Kroger or Albertsons, and they account for more than 50 percent of all supermarket sales in the state. Albertsons owns Safeway and Haggen, while Kroger owns QFC and Fred Meyer. Collectively, Kroger and Albertsons operate more than 300 supermarkets in Washington, including approximately 194 in the Seattle-Tacoma-Bellevue metropolitan area.

After the companies announced their proposed merger, The Seattle Times, citing numbers from Nielsen, reported that more than half of households in the Seattle metro area alone most frequently shop at a store owned by one of the companies.

The proposed merger will eliminate head-to-head competition between the two largest grocery operators in the state. Ferguson’s lawsuit details that QFC — which is owned by Kroger — considers Safeway/Albertsons as its main competitor in the Seattle area. Across Washington, Albertsons considers either Fred Meyer or QFC — also Kroger owned — its primary competitor in every local market in Washington.

The supermarkets monitor each other’s prices and adjust the cost of products as part of that competitive relationship. Albertsons’ Seattle Division, for example, has lowered its prices to compete with Fred Meyer and QFC, and highlighted in its advertisements products where it offers a better deal.

The merger eliminates that competition.

In late August, the companies proposed to sell off 413 stores nationwide — 104 in Washington — plus some distribution and brand assets to diminish concerns about the new combined company’s market dominance.

However, Ferguson asserts the plan does not do enough to address that dominance, and it could actually decrease competition.

The stores would be sold to C&S Wholesale Grocers, a wholesale distributor that does not currently operate any supermarkets in Washington. If the merger succeeds, C&S would become the second-largest supermarket operator in the state nearly overnight.

Plan to sell off stores inadequate

Under Kroger’s and Albertsons’ plan, the stores will be sold to C&S Wholesale Grocers, which is primarily a wholesale supplier, and currently only operates 23 supermarkets. The plan means C&S would go from operating 23 supermarkets to nearly 450 around the country — including 104 in Washington.

C&S would also take over any pharmacies and fuel centers associated with the stores it is acquiring. C&S currently operates only one pharmacy in New York, and does not operate any fuel centers.

The newly combined Kroger-Albertsons brands will be immediately positioned to outcompete their former supermarkets while they transition to a new owner — one that is still trying to adjust to becoming a large-scale nationwide supermarket operator.

If those stores fail, hundreds of Washingtonians could lose their jobs and grocery choice could be diminished even further for Washington shoppers. Even if the locations are ultimately sold off to another company better equipped to operate them, a second sale only increases the time these supermarkets are in transition, giving the newly merged company a further competitive advantage.

Previous divestment failed

Washington has seen a very similar divestiture plan fail in the not-too-distant past.

The current proposed divestiture plan bears a striking resemblance to Albertsons’ failed divestiture of Washington-based stores to a similarly unqualified buyer, Washington-based Haggen, less than a decade ago. As a part of Albertsons’ 2015 merger with Safeway, 146 Albertsons and Safeway stores — including 26 in Washington — were sold to Haggen. At the time, Haggen was a regional supermarket chain with only 18 stores that lacked the infrastructure to rapidly expand to a multi-state, national grocery retailer.

It struggled to operate the divested stores, and less than a year later, Haggen was forced to file for bankruptcy.

Albertsons was able to reacquire more than 50 of its divested stores, including 14 Washington locations, in some cases paying only $1 per store at auction. It now owns and operates Haggen stores in Washington.

If C&S fails, it is also possible Kroger could be allowed to reacquire its divested supermarkets, just like Albertsons did after Haggen’s failure.

Lawsuit seeks a permanent injunction blocking the merger nationwide

Ferguson’s lawsuit asks the court to find that the merger violates Washington antitrust law, and to issue an injunction permanently blocking the merger nationwide.

Assistant Attorneys General Paula Pera, Miriam Stiefel, Helen Lubetkin and Amy Hanson, paralegals Michelle Oliver and Kate Iiams, and Litigation Support Manager Kimberly Hitchcock are handling the case for Washington.

The Office of the Attorney General’s Antitrust Division is responsible for enforcing the antitrust provisions of Washington’s Consumer Protection Act and federal antitrust laws. The division investigates and litigates complaints of anticompetitive conduct and reviews potentially anticompetitive mergers. The division also brings actions in state and federal courts to enforce antitrust laws. It receives no general fund support, funding its own actions through recoveries made in other cases.

For information about filing a complaint about potential anticompetitive activity, visit https://fortress.wa.gov/atg/formhandler/ago/AntitrustComplaint.aspx.

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Kellanova Adjusts Leadership as Hood Set to Retire

Kellanova’s North America president, Chris Hood, will retire at the end of April. Nicolas Amaya, president of Kellanova Latin America, will succeed Hood as president of Kellanova North America.

Victor Marroquin, general manager of Kellanova Mexico, will succeed Amaya as president of Kellanova Latin America. Both region leaders will report to Chairman, President and Chief Executive Officer Steve Cahillane. Transitions begin immediately.

“A seasoned consumer packaged goods leader, Chris joined our company as part of the Pringles acquisition in 2012 and has contributed tremendously during his tenure,” Cahillane said. “Over the past nearly six years in his role leading North America, Chris created an agile, category-led business model, driving better performance and unlocking innovation, while guiding the North America organization through major business and portfolio realignments, including the successful exit from direct-store delivery, the divestiture of non-core brands, and the recent spin-off of WK Kellogg Co.  We wish Chris and his family all the best and extend our deepest appreciation for his contributions.”

Hood’s retirement prompts orderly successions by Amaya and Marroquin, both of whom have distinguished themselves as highly effective business leaders.

“In Nicolas and Victor, we have proven leaders who are committed to delivering on our Differentiate, Drive & Deliver strategy, developing talent and advancing our purpose,” Cahillane said. “These appointments demonstrate the strong caliber of our people and talent pipeline.”

Over the past four years in his role as President, Kellanova Latin America, Amaya has led the team to deliver robust and consistent top- and bottom-line growth and build strong relationships with key customers and distributors across the region. He has also been at the forefront of digital transformation.

“Nico is a visionary leader who has a strong track record of developing high-performing teams and delivering outsized growth in both Latin America and North America,” Cahillane said. “He has the successful track record and Kellanova experience to continue to drive our business forward as the new leader of our largest region.”

Since joining the company in 2001, Amaya has held a variety of leadership positions in both the United States and Latin America across the cereal, frozen and snacks businesses including general manager, snacks and growth platforms for Latin America; general manager, category marketing and innovation, Latin America; and general manager, Mexico, before being named president, Kellogg Latin America in 2019. Prior to Kellogg, Amaya held various marketing roles at Unilever.

Marroquin joined Kellogg in 1997 in sales, and then held progressive roles in marketing, customer development and commercial management. Since 2014, he has served as general manager in several roles across Latin America leading countries such as EcuadorPeruBrazilColombia and the Andean region, and then was named general manager, Mexico in 2020.  In these roles, Marroquin has consistently led the team to deliver strong top- and bottom-line performance, strengthen the brands’ market positions, transform our go-to-market models and elevate key customers´ strategic partnerships.

“Victor has experience in every key market of the Latin America business,” Cahillane said. “He is well respected and well known throughout the region – both within Kellanova and the industry. He has sustained growth momentum in Mexico despite political, economic and regulatory challenges, and accelerated delivery of our Differentiate, Drive & Deliver strategy.”

Kellanova is a leader in global snacking, international cereal and noodles, and North America frozen foods, with a legacy stretching back more than 100 years. Powered by differentiated brands including Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, RXBAR, Eggo, MorningStar Farms, Special K, Coco Pops and more, Kellanova’s vision is to become the world’s best-performing snacks-led powerhouse, unleashing the full potential of our differentiated brands and our passionate people.

Kellanova is guided by our purpose to create better days and a place at the table for everyone through our trusted food brands. We are advancing sustainable and equitable access to food by addressing the intersection of hunger, sustainability, wellbeing, and equity, diversity & inclusion, with the ambition of creating Better Days for 4 billion people by the end of 2030 (from a 2015 baseline). Visit www.Kellanova.com for more information.

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Catalina Crunch Taps Behrens as CEO, Co-Founder Warady Leaves

Catalina Crunch, the pioneering brand in healthier snacks, has appointed Doug Behrens as chief executive officer. Behrens will be responsible for bringing Catalina Crunch into its next phase of growth and expanding the brand’s retail footprint at a time when the company’s demand is at an all-time high. This  announcement builds on Catalina Crunch’s recent growth as the company continues to make ongoing investment in hiring the best talent to join the executive team.

“I am thrilled to welcome Doug Behrens to the Catalina Crunch team. Hiring him is instrumental to get us to the next level as our needs as a company have changed. We are very excited about the future and look forward to building on the success that has defined the brand to date,” said Krishna Kaliannan, Catalina Crunch’s founder.

“I’ve been very impressed with the explosive growth of Catalina Crunch and excited to join the team for the next chapter. The better-for-you food and snacking space is incredibly dynamic and Catalina is well positioned to be a disruptive leader,” Behrens said.

Behrens brings a wealth of experience in the food and health space coupled with a proven track record of driving growth and innovation. He has held leadership positions at Johnson & Johnson, Danone, Amplify Snack Brands and most recently served as the president and chief customer officer for KIND. His strategic vision aligns seamlessly with Catalina Crunch’s commitment to providing wholesome, delicious, and innovative products to our valued customers.

Kaliannan remains very involved in the day to day operations of the business as founder while Joel Warady, president of Catalina Crunch, will transition to another opportunity after an impressive tenure under which the company experienced significant growth. The transition is seen as a positive step forward, reinforcing the company’s dedication to continuous improvement and sustained growth.

This important announcement follows the recent launch of the brand’s newest product, Dark Chocolate Cookie Bars and its exciting collaboration with NBA player Jalen Brunson. Catalina Crunch is well-positioned to continue to expand its product offerings, explore new markets, and reinforce its position as a trailblazer in the health food industry. The brand’s commitment to quality, transparency, and customer satisfaction remains unwavering and this hire will be key to continue that success.

For more information on Catalina Crunch visit us.catalinacrunch.com and follow on Instagram (@CatalinaCrunch), Facebook (@CatalinaCrunch) and TikTok (@CatalinaCrunch). For sales inquiries, please email sales@catalinasnacks.com.

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