• 🗞️ Breaking News: The FTC Sues To Block Kroger/Albertsons Merger
• 📈 Sprouts Posts +8% Q4 Sales Growth
• 🤩 Arnulfo Ventura Joins Siddhi Capital
• 🥶 Frozen Together: Two Frozen Food Makers Merge
• 🛒 Oklahoma Senate Passes ‘Historic’ Grocery Tax Cut Bill. Will Illinois Follow?

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Americans spent 11.3% of their disposable income on food in 2022, according to a new report from the Wall Street Journal.

While conversations around high grocery food prices have typically been presented on a pre- and post-pandemic timeline, this report maps grocery costs over the past three decades. It found that food budgets haven’t swallowed this much of American shopper’s incomes since 1991. 

“George H.W. Bush was in office, “Terminator 2: Judgment Day” was in theaters and C+C Music Factory was rocking the Billboard charts,” the article reads, noting the rate then was 11.4%.

Labor department data from January shows that grocery prices have continued to climb, but at a more modest 1.2% rate compared to the peak of 9.1% in 2022.

According to the Associated Press, consumers are partially responsible for helping those increases moderate – or at least for making Big Food pay some attention – by picking more private label and store brand items, switching to discount stores and buying fewer non-essential items like snacks and gourmet foods.

But prices, on average, are still about 19% higher than pre-pandemic times, the AP notes, and consumer’s down-trading behavior became a focal point for multinationals like PepsiCo, Kraft Heinz, Unilever, Hershey and General Mills during recent earnings talks. 

A quick run of the numbers: PepsiCo saw volume declines for both Frito-Lays (-2%) and Quaker Foods (-8%) in Q4 2023. Kraft Heinz, which reported a 1% price increase in Q4 2023, saw sales fall as consumers picked cheaper brands. Unilever remained an outliner: In Q4, the CPG giant increased prices 2.8% and volumes grew 1.8%, though that rate is a lot lower than its 10.8% price increase at the beginning of 2023. 

Experts cited by both the WSJ and AP emphasized that it's rare for food prices to be lowered, but some expect prices to decline this year considering how much, and how quickly, they increased in the first place. Recent pressure from President Biden, consumers and the deceleration of many commodity costs have also contributed to potential pricing declines. 

While Big Food wrestles with how to distribute costs and reposition for profitable volume-driven growth, at least one big name has already lowered prices. 

Balenciaga recently released its new Summer 24 collection featuring a new line of branded Chips Bags. The release features three bags in Cheese and Onion, Spicy Chili and Salt and Vinegar styles and each of the aluminum foil-looking accessory retails for $1,750. 

But just wait. The designer (which also collaborated with luxury grocer Erewhon in December) made its first foray into Chips Bag accessories back in the peak inflation times of 2022 with a line designed with Lay’s. Those purses carried a slightly steeper price tag of $1,800, making this new launch (technically) a bargain, all economic factors considered.

This morning, the Federal Trade Commission filed a lawsuit in an Oregon district court to block the proposed merger between grocery giants Kroger and Albertsons. Nine attorneys generals joined the litigation including AGs from Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming.

The federal regulator has cited the pair’s “inadequate” divestiture plan as one of the primary reasons for the pushback. Overall, the FTC believes the merger eliminates competition in the grocery industry, and will lead to higher prices for consumers and harm the tens of thousands of workers employed by both corporations. 

Stay tuned for a full analysis, and details on what comes next, later today on Nosh.  

Sprouts Farmers Market credited its differentiated dairy, protein and frozen offerings for growing sales in its Q4 earnings report.

🔎 Here’s the top-level view:

• In FY 2023, Sprouts posted net sales of $6.8 billion, a 7.7% year-over-year increase attributable to improving traffic trends and the opening of 30 new stores. 
• In Q4, the retailer’s ecommerce sales grew approximately 17%, representing 12.4% of Sprouts’ total sales. Additionally, the grocer partnered with Uber Eats to acquire new customers.
• Sprouts plans to open approximately 35 new smaller format stores in the year. 

🔮 To continue to support its recent gains, Sprouts will launch new brand products, improve customer acquisition and introduce the first iteration of its new loyalty program, CFO Curtis Valentine told investors.

Building on his over 17 years working and leading various CPG companies, Arnulfo Ventura announced this morning on LinkedIn he has joined food and beverage equity firm Siddhi Capital as its new SVP of strategy. 

🤝 Ventura will work alongside with former A Dozen Cousins sales director Amber Bylund, who serves as Siddhi’s SVP of sales strategy.

🤔 The news comes nearly a month after the announcement that Alter Eco, where Ventura served as CEO from January 2022 through September 2023, had been sold to new investment outfit Trek One Capital.

👆 Before leading Alter Eco, Ventura was CEO of plant-based tortilla chip Beanfields (which recently was relaunched by Moosehead Brands) and held roles at Califia Farms and PepsiCo. He also launched and operated the first RTD aguas frescas brand Cobá.

Twin City Foods and Smith Frozen Foods, Inc. announced late last week that a term sheet has been signed to merge the two frozen food manufacturers under a new name, TCF Holdings, in order to strategically align resources and improve capabilities. The terms of the deal have not been disclosed but it is expected to close in Q2.

🧑🏻‍🌾 The two family-owned businesses work directly with farmers to process peas, corn, carrots and other produce.

🏭 Eighty-year old Twin City Foods – based in Stanwood, Washington – specializes in frozen vegetable co-packing and operates three processing plants in Washington and Michigan, as well as four cold storage facilities totalling a combined storage capacity of roughly 137 million pounds of product.

🥕 Similarly, Oregon-based Smith Frozen Foods has operated for over a 100 years and produces over 130 million pounds of frozen produce.

The Oklahoma Senate on Thursday passed a bill (HB 1955) that would eliminate the state’s current 4.5% tax on groceries. The bill is now headed to Gov. Kevin Stitt’s desk. He is expected to sign it, which if passed, will go into effect in August.  

💭 “This is a truly historic day. With the passage of House Bill 1955, the Legislature has managed to give Oklahomans the largest single tax cut in state history, returning $411 million to our citizens at a time when they need it most,” said Speaker Charles McCall in a statement. 

🖋️ The removal of a grocery sales tax is anticipated to save the average Oklahoma family $648 per year.

👀 Oklahoma isn’t the only state seeking to provide grocery shoppers relief: during his recent State of the Senate address, Illinois Gov. JB Pritzker announced a plan to permanently do away with the state’s 1% sales tax on groceries.