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As a result of the surge of takeovers, 50 of the remaining 20,000 companies have emerged at the pinnacle. These 50 corporations now own two-thirds of the industry’s assets. Based on present trends, these 50 firms—one-quarter of 1 percent of them all—will control virtually all the food industry’s assets in another 20 years.5

By the 1970s the supergiants had begun to gobble up the giants. In what Business Week called the “great takeover binge,” Pillsbury plunked down $152 million for Green Giant (frozen vegetables). For $621 million, R. J. Reynolds seized Del Monte’s vast fruit and vegetable empire. Nabisco merged with Standard Brands (Chase & Sanborn coffee, Blue Bonnet margarine, Planter’s peanuts, etc.).

Now, in most food lines—such as breakfast cereals, soups, and frozen foods—four or fewer firms control at least half of the sales. (See Figure 7.) Economists call that a “shared monopoly”—and with it come monopoly prices, an estimated $20 billion in overcharges to consumers each year.6 Anticompetitive practices cost consumers a 15-cent “monopoly overcharge” on every dollar’s worth of cereal, according to a four-year study by the Federal Trade Commission.7

And who’s to resist? The combined budget of the antitrust divisions of the Justice Department and the Federal Trade Commission is $20 million a year, the sum that a corporate food giant can put into promoting just one “new” processed food. Spending only $20 million to counter the monopoly abuses in a trillion-dollar economy is what Ralph Nader calls a “charade.”8

The “Grab a Bigger Market Share” Strategy

But now where are you? In most major food categories, a few giants now make over half the sales. Proctor & Gamble (Folger’s) and General Foods (Maxwell House, Sanka) together control nearly 60 percent of the ground-coffee market.9 Kellogg’s, General Foods, and General Mills divvy up 90 percent of the dry-cereal market.10 Campbell’s alone controls nearly 90 percent of the soup market.11 And on it goes. Industry studies show us that at least half of the shoppers in a supermarket buy mainly the top two brands, even though they usually cost more. So you’ve got to become number one, or at least number two. You’ll have to lure some customers away from the other Big Food companies. But you can’t compete in ways that hurt your long-term profits—like offering better quality or lowering prices. Hmmm. Why not up the advertising budget? And you can come up with some eye-catching “new” products in some eye-catching new packages. If you can’t compete in price or quality, you must compete in visibility—and the more snazzy the packaging, the more visible. With more products, you can squeeze your competitors off the supermarket shelf.

Figure 7. Control of Our Food by Shared Monopolies*

To create consumer loyalty, you have to have brand names. And that’s a lot easier with processed foods. (You did stick labels on bananas, but lettuce and mushrooms were a lot more trouble.) And since you want to sell the products from your giant assembly lines all over the country, you’ll need to add such delicacies as BHT and polysorbate for indefinite “freshness.”

THE IMPACT OF YOUR STRATEGY

Food advertising costs shot up from about $2 billion a year in 1950 to a record $13 billion in 1978.12 “On the average, six cents of every dollar we spend on processed foods will go directly to buy ad time on television and other promotion,” says food researcher and writer Daniel Zwerdling. “But when we buy one of industry’s hot-selling brands, we pay far, far more. In a recent year, breakfast eaters who bought Kellogg’s Country Morning, a so-called ‘natural cereal’ that better resembled crumbled cookies, paid 35 cents of every dollar merely to finance Kellogg’s ads.…”13 But the costs of the ads themselves are only a fraction of what the consumer ends up paying for advertising. Because advertising is power, people are willing to pay more for a highly advertised brand-name item than they would for exactly the same product sold under a less well-known or store brand