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2025 M&A trends in grocery retail: The impact of the blocked Kroger-Albertsons merger

2025 MA trends in grocery retail The impact of the blocked 
KrogerAlbertsons merger
The failed merger may bolster regional M&A in the grocery landscape.

For CPG brands, the fallout between Kroger and Albertsons presents both challenges and opportunities—particularly for regional players and private label offerings that could reshape the competitive landscape, according to Ross Cloyd, director of grocery retail insights at market research firm Kantar.

Last week, federal judges in Oregon and Washington blocked the merger between the two grocery chains citing anti-trust violations, higher grocery prices and harming thousands of workers, as reported previously by FoodNavigator-USA.

Kroger and Albertsons’ proposed divestiture plan was deemed insufficient to address these issues, leading to Albertsons suing Kroger for willful breach of contract, Cloyd said.

What does the failed merger mean for CPG food & beverage brands?

Cloyd outlined several implications for CPG brands after the fallout of the merger.

The first is if both retailers pursue legal action against the other, the legal fees may drain resources from improving store operations or merchandising, Cloyd said. Yet, it could bode well for the retailers’ private label products to bolster margins and recover costs, which could potentially impact national brands, he added.

For regional grocers like Publix, H-E-B and Hy-Vee, brands may benefit reinvesting in localized retail opportunities that focus on community and personalization, he said.

“Those regional players are providing opportunities in which brands should consider and think about how they are connecting with shoppers,” Cloyd said.

These opportunities include exploring alternative revenue streams like, retail media networks, omnichannel capabilities, curbside pickup and delivery systems.

Cloyd points out that the decision for Kroger and Albertson to continue a costly legal battle should be weighed carefully.

“Ultimately, they can continue to use resources to take this battle to court, but is that going to be the right move ultimately for their shoppers and how they need to compete?” he said.

The grocery industry is under critical pressure to quickly adapt and evolve, especially with the growing role of digital and omnichannel capabilities. Further, investing in legal fees – on top of the reported $1 billion already spent – could leave Kroger and Albertsons at a disadvantage compared to competitors like Publix and H-E-B which are directing their capital spend toward growth strategies like acquiring new stores, Cloyd said. For example, Publix has increased its CAPEX by 25%, he added.

One possibility for Kroger and Albertsons is seeking a settlement or exploring other partnerships. Conversely, Kroger’s CEO Rodney McMullen has expressed confidence in Kroger’s business model despite the merger’s outcome, Cloyd added. Yet the question still remains whether the two retailers continue to pour resources in the legal fight given the broader shifts in grocery and adjacent channels competing for shoppers.

Grocery channel is at an ‘inflection point’

One trend Cloyd predicts for 2025 is regional players like Hy-Vee and Spartan Nash purchasing other smaller regional players. However, M&A activity will depend on the new administration’s influence, he added.

For smaller players, this environment represents “an inflection point” where retailers are at a critical juncture where they must evolve and quickly meet the changing needs of shoppers, Cloyd said.

“They are going to thrive or try to survive,” he said.

During the COVID-19 pandemic, grocery retailers were challenged to quickly adapt and strengthen their omni-channel capabilities, usually through “makeshift solutions,” Cloyd said.

“Now as retailers plan strategically for the long term, there is a clear push towards adopting new technologies. They need to think beyond quick fixes to address their digital and fulfillment capabilities to stay ahead,” he elaborated.

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