A Kroger Exec Admitted To Price Gouging, Fixing Prices On Milk And Eggs, Far Above Inflation
TRIB LIVE - A top Kroger executive admitted under questioning from a Federal Trade Commission attorney on Tuesday that the grocery chain raised its egg and milk prices above the rate of inflation, a concession that came as no surprise to economists who have been highlighting corporate price gouging across the U.S. economy in recent years.
Andy Groff, Kroger's senior director for pricing, said during a court hearing on the FTC's legal challenge to the company's proposed acquisition of Albertsons—its primary competitor—that Kroger's objective is to "pass through our inflation to consumers."
Groff's comment came in response to questioning about an internal email he sent to other Kroger executives in March. In that note, Groff observed that "on milk and eggs, retail inflation has been significantly higher than cost inflation."
But Rakeen Mabud, chief economist at the Groundwork Collaborative, noted Wednesday that "execs all over the economy were saying this stuff on their earning calls back in 2021."
"This was not a secret," Mabud added.
Kroger, the beloved grocery giant, has been caught red-handed, admitting to what we all suspected: they've been gleefully hiking prices on essentials like milk and eggs, far beyond what inflation would justify. Shocking, I know.
Andy Groff, Kroger's pricing mastermind, spilled the beans during an FTC hearing. His internal email, a masterpiece of corporate honesty, revealed their strategy: "pass through our inflation to consumers." Translation: "Let's squeeze those poor fuckin pleabs for every penny we can."
The American Way!
Kroger's defense? Oh, that email was "cherry-picked," they say. Their decades-long business model is all about "lowering prices." Ok Mother Theresa.
Bloomberg reported Tuesday that "in Illinois, where Kroger operates the Mariano's chain, company executives create a weekly report on egg prices, comparing prices from Walmart, Meijer Inc., and Albertsons' Jewel-Osco, said Matthew Marx, president of the Kroger division overseeing Mariano's."
"The FTC walked Marx through several of the weekly egg reports from 2022 and 2023," the outlet added. "In May 2022, for example, both Walmart and Meijer dropped egg prices by 14 cents a dozen, but Mariano's opted to keep its pricing the same to match the higher price at Jewel-Osco, Marx said. A year later, in April 2023, as egg prices again soared, Mariano's opted to keep its pricing near Jewel-Osco's even as Walmart was lowering its own."
The U.S. grocery sector—dominated by Kroger, Walmart, and a handful of other major companies—profited hugely during the Covid-19 pandemic as corporate giants exploited supply chain disruptions to aggressively jack up prices.
"The grocery industry, as represented by four of its largest players, became more profitable in the pandemic, and it has stayed that way for a couple of years at least," The Financial Timesnoted Monday. "It is a good guess that price increases in excess of cost increases have played a role in this."
This revelation isn't just about Kroger. It's a symptom of a larger disease plaguing corporate America. Companies across the board have been posting record profits while consumers struggle with sky-high inflation. The math is simple: they're raising prices because they can, not because they have to.
Remember those "supply chain issues" we kept hearing about? Sure, they played a role. But let's be honest, some prices were elevated simply because businesses knew they could get away with it. It's the American way, right? Profit over people.
I'm sure people in other industries can relate much better, with other costs and services, but being in the hospitality industry, and growing our company significantly over the past 5 years, we got fucking clobbered by building costs during covid. But it was one of those things you just had to suck up and take on the chin. Labor was scarce, everybody was building, doing renovations, and skilled labor is hard to come by these days. Market demand forced labor prices higher, and when you threw in the fact that supply chains came to a screeching halt, and wood and building materials became harder to come by, those costs went through the roof as well. What you used to be able to build for say $500 a sq ft was suddenly $700-800 /sqft.
Again, understandable given the situation.
But two years later, those costs haven't come down. They're the new baseline basically.
And even that is understandable. It is capitalism after all. You and your work is worth what somebody is willing to pay. Adam Smith and the Wealth of Nations right? Free markets baby. Why would you lower costs if people are still paying higher rates?
That is the part of this I understand and fully grasp. A finance major or economist is obviously much smarter and well versed in this shit than my dumb ass, but that has to be different from standard, by the book "inflation" no?
Intentionally fixing prices on consumer goods, and necessities like basic groceries seems a lot different than marking up your costs to rebuild the Johnson family back deck.
Gouging average folks on shit that is essential to feeding their families feels like dirty pool.
The FTC (by the way, does this organization actually do anything?) is trying to block Kroger's merger with Albertsons, claiming it would lead to even higher prices. But let's face it, in this "oligarchic structure" we call capitalism, consumers have little choice.
My hero George Carlin said it all too perfectly, we have "the illusion of choice".
We're at the mercy of these corporate giants, who prioritize shareholder wealth over everything else. Guess we just have to live with it.
p.s. - slightly different topic, for a different blog, but on the subject of price fixing, since when did it become totally "normal" and accepted by us all that airlines have all pretty much cooperated to align on flight costs? If you pull up flights from one city to another on a specific date, and compare on different airlines sites, they are almost always identical. That's not by coincidence. Maybe I'm crazy but I don't know how this isn't a bigger deal to people?