Senator Elizabeth Warren berates supermarket chains for price hikes

US Senator Elizabeth Warren (D., Mass.) Denounced high food prices in letters recently sent to The Kroger Co., Albertsons Cos. and Publix Super Markets.

In the three letters, all dated December 14, Warren claimed that supermarket chains could do more to dampen the rise in grocery prices, spurred by inflationary pressures, after recording large sales gains. and profits amid high consumer demand triggered by the COVID-19 pandemic. . The Senior Senator addressed the letters to Kroger’s CEO Rodney McMullen to CEO of Albertsons Cos. Vivek Sankaran and Publix CEO Todd Jones.

“I am writing to you regarding my concerns about rising food prices for American consumers and the extent to which large grocery retailers are generating huge profits for company officials and investors while making it harder for them. American families putting food on the table. While many Americans have faced the loss of jobs, homes and loved ones during the COVID-19 pandemic, food companies like yours have made huge gains with record sales and profits Warren said in letters to Kroger, Albertsons and Publix.

Citing various sources, Warren said Kroger reported a profit of $ 2.6 billion for 2020, up 5.6% year-over-year, while Albertsons totaled $ 1.89 billion. net profit for 2020 compared to $ 612.1 million in 2019. She also noted that Publix reported 60% profit growth for the third quarter of 2020.

“In 2021, these same companies continued to make huge profits while pushing consumers to increase grocery costs,” Warren wrote. “I am writing to you today to request information on the steps your business has taken to protect consumers and how you will ensure that your business is not putting profits above the needs of its customers in the middle. of an unprecedented global crisis, ”she added.

IMF-Food Industry Association

Kroger, Albertsons and Publix could not immediately be reached for comment.

IMF-The Food Industry Association, a grocery and food industry retail group, noted that supermarkets were struggling with a series of high operating expenses, higher costs of consumer products packaged (CPG) and fresh food, labor shortages and supply disruptions while striving to keep products on shelves amid unprecedented demand and customers and employees alike. safe from COVID-19. Additionally, businesses have had to adapt on the fly to sudden changes and rising costs.

“American food manufacturers and retailers continue their commitment to providing the safest and most abundant food supply in the world. Through coordination with consumers, supply chain partners and legislators, the industry has overcome many of the concerns about shortages and skyrocketing prices, and IMF greatly appreciates the [Biden] the continued engagement of the administration and Congress on these issues, ”the IMF said in a statement in response to Warren’s letters.

“Families have seen costs rise for almost all consumer goods, including some items in the grocery store,” the trade group said. “The current price increases are due to a combination of supply chain challenges – from labor and transportation shortages to higher fuel costs and increased consumer demand. Grocers are doing all they can to absorb these cost increases, and we ask consumers to continue working with us as we recalibrate our supply chains.

IMFIMF COVID grocer cost changes.png

In the online resource on the factors driving food prices, the IMF noted that retailers absorbed sharp cost increases in the first months of the pandemic.

In November, the consumer price index for food rose 6.1% year on year, reflecting increases of 6.4% for home food and 5.8% for home food. outside, the US Bureau of Labor Statistics (BLS) reported earlier this month. The BLS noted that the November hike in the home food index marked the largest 12-month gain since the period ending December 2008, with increases in all six major grocery food groups.

On a monthly basis, the food price index edged up 0.7% in November after increasing 0.9% in September and October. November’s increase reflected a 0.8% gain in the home food index, marking the third consecutive month of increases in all six major indexes for grocery store food groups.

Yet the weekly spending of U.S. consumers on groceries has remained largely stable over the past year, and the amount has declined since the storage phase in the early months of the pandemic, according to the IMF. The organization offers a variety of online resources to illustrate the factors behind food pricing, including the effects of supply and demand.

“Despite concerns about inflation, average household grocery spending has remained stable at an average of $ 144 / week over the past year, which is actually down from $ 161 / week in the last year. stronger from the pandemic, proving that American consumers are remarkably resourceful and resilient, ”the IMF said.

Consumer demand for groceries jumped 50% in 2020, pushing same-store food retailer sales by almost 16% industry-wide, according to IMF’s report “The Food Retailing Industry Speaks 2021 ”published in September. On average, same-store retail food sales grew 15.8% year-over-year in 2020, and over 90% of grocery retailers surveyed reported an increase in same-store sales for the year.


The outbreak of COVID-19 in 2020 has changed the workforce dynamics for grocery retailers, according to IMF.

Meanwhile, the U.S. food retail industry has spent nearly $ 24 billion in costs related to the COVID-19 pandemic, according to an IMF study released in late March. That total included $ 12 billion in payroll and incentive compensation, $ 5 billion in increased employee benefits, $ 3 billion in cleaning / sanitation and labor supplies, $ 1.5 billion in $ 1 billion in technology and online delivery costs, $ 1 billion in personal protective equipment (PPE) and related expenses, and $ 1 billion in non-cash benefits and immunization incentives, IMF reported.

Overall, 63% of IMF retailers surveyed said they expect sales to decline in 2021, while 13% expect stable sales and 23% expect sales to increase. On the profit side, 75% of respondents expect profits to decline in 2021, and only 10% expect profits to increase.

In his letters, Warren asked Kroger, Albertsons and Publix to provide information on their profit targets during the pandemic, average wholesale unit prices paid, and retail unit prices paid across eight product categories during fiscal year 2021, and whether salaries were increased during the pandemic. She said the information was requested to “address my concerns about your company’s decisions during the pandemic and the impact of those decisions on your customers and workers” and requested that it be provided by the 7th. January.

“Your business, and the other major grocers who reaped the benefits of a turbulent 2020, appear to pass the costs on to consumers to preserve your pandemic earnings, and even take advantage of inflation to add heavier burdens,” he said. Warren writes to the three chains, adding, “Your companies had a choice: They could have kept prices lower for consumers and properly protected and compensated their workers, or made massive payments to senior executives and investors. It is disappointing that you have chosen not to put your customers and employees first. “

Although not mentioned in Warren’s letters, the fresh-food grocery chain Stew Leonard’s also faced high costs that impacted on-shelf prices, according to the president and chief executive officer. direction Stew Leonard Jr.

“I think Elizabeth Warren is wrong. We’re not increasing the prices or anything. We have to pass on some prices, ”Leonard said in a Fox Business video interview this week. “Obviously we are dealing with a lot of small local American farmers right now. Just watch what happens when they go to refuel their tractor in the morning. Look at the fuel prices hitting them. Feed prices hit them, labor – every one of our suppliers, from our ranchers to our fishermen to our berry growers, tells us that overall their costs have gone up. We try to hold back as much as possible and not pass them on to the client. “

Customer demand for food also remained robust, Leonard noted in the interview, pointing to his busy store in the background. The Norwalk, Connecticut-based chain has seven stores in Connecticut, New York and New Jersey.

“I think half of the costs that people are incurring right now have to do with the actual increases in the prices of fuel, labor and feed,” he told Fox. Business. “The other half, I think, just has to do with exploding demand.”

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