Okay, so the grocery business is far removed from your farm. Or is it? Increasingly, grocers and foodservice entities are speaking up about your production practices. In some cases it influences their decisions on which products to offer and promote to their customers. It certainly comes into play when a grocer decides to offer products with a premium label at a premium price.
Just this week, Albertson's, the grocery and drug store operator, will be sold for $17.4 billion in cash, stock and an assumed debt of about $8 billion. The buying was done by a joint venture involving Supervalu, a group lead by Cerberus Capital Management and CVS Corp.
Albertson's first came up for sale last September, but later turned down an offer from the same players that was nearly identical to the company has now accepted.
By purchasing its section of Albertson's, Super Valu will become the second largest grocer in the United States, behind Kroger. Wal-Mart is the No. 1 retailer in the United States and globally.
Super Valu already operates Cub Foods and other grocery chains, mainly discount chains like Save-A-Lot. It will pick up about half of Albertson's stores, mostly in urban markets such as Chicago. The addition of 1,100 stores gives it a strong urban presence to compete with Wal-Mart, which has faced obstacles in its attempts to expand into many big urban markets.
The Cerberus Capital Management group will acquire stores in Texas, Northern California, Florida, the Rocky Mountains and the Southwest. The plan is to continue to operate those under the Albertson's name. CVS Corp., a major drug-store entity, will acquire all of Albertson's Osco drug stores.
Another point worth noting about Super Valu, the Minneapolis-based grocer has rolled out its new Sunflower MarketStore. The plan is to open 50 others within the next five years. The concept is to provide value-priced organic and "natural' products, making these things accessible to more consumers. The grocer cites a study showing that two-thirds of consumers would like to buy more organic foods, but they don't like current prices.
Super Valu's purchased growth and movement into organics will jumble up the grocery market, which will make things interesting there. But the fact that it is becoming an even larger player and has plans for organic and natural products could make things interesting on the farm as well.