Absolute Supermarket Power

Oct 19, 2017

Baron Acton first said ‘Power tends to corrupt, and absolute power corrupts absolutely.’

He followed this up with lessor known statement: ‘And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that.’

Though in the mid 1800s this English politician and writer discussed these topics, it was in context of more traditional industries. These days, you can apply that thinking directly to supermarkets and how they mange to exert massive power over supply and consumer markets. I experienced this first hand as we farmed out cacao and looked to bring them to the retail market. ChangeMakers like us look beyond the shelving space for sale and bright lights, and looks a little beyond.

How do Supermarkets get their power?

Meeting the growing global demand for food and agricultural products requires:

  • more sustainable production methods
  • fair trading practices
  • restructuring of supply chains

But the market remains in the hands of just a few retailers that continue to hold the power of the market on a global level, making producers lose faith in policy makers. And lose touch with farmers and those who put the back-breaking work into making food available on demand.

Agricultural supply chains suffer from injustice in market power. I see this directly in cacao, and also in our friends from coffee, tea, sugar from the commodity trade, to locals like soy, corn, and even your favourite ham. Restructuring of supply chains has hurt the industry and is shown through only large producers and exporters that can satisfy the demands and thus get a share of the benefits, such as Aldi, Lidl and Carrefour by:

  • the expansion of supermarket chains
  • the higher demand for processed food products

· the consolidation of retail, processing and logistics’ chains

  • tight coordination
  • the pressure for lower prices

One main issue is large buyers and producers are being able to sell in by volume and name, not necessarily by quality or price value. This in turn is squeezing out and putting out of business the smaller suppliers and buyers. ChangeMakers are watching this with both policy and ethics in mind.

We have see that the development of store brands has caused another major issue because the price of the product itself is cheaper, and has saturated the market by the big box companies. Store brand products are sold at a lower price than most branded competitors, because their marketing costs are minimal and they profit from large purchase volumes. I see chocolate still under a euro, which I can promise you, is not natural nor fair.

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