The grocery M&A moves that defined the past quarter century

The last 25 years in the grocery industry have been defined by a handful of big M&A deals—and dealbreakers—as grocers sought to compete with giants like Walmart. From the acquisition that bred industrywide panic to the deal that spelled disaster for a megamerger and the quieter consolidation that actually worked out, these are the M&A moves that shaped grocery’s past and and likely its future.

Kroger and Albertsons

Many of Kroger and Albertsons’s deals in the early 2000s would eventually come into play during their own failed effort to merge.

In 2006, SuperValu, alongside CVS and Cerberus Capital Management, agreed to buy Albertsons for $17.4 billion, a move that hit many snags, particularly during the recession. The companies ultimately sold some chains, including Albertsons, to a Cerberus-headed investor group in 2013.

Then in 2015 came one of the quarter century’s biggest transactions: Albertsons bought Safeway in a $9.4 billion deal. To gain FTC approval, the two divested 168 stores, most to small Washington-based chain Haggen. That move proved disastrous for Haggen, which crumbled under such rapid expansion, closing stores and selling many back to Albertsons in 2016.

Ghosts of these M&A mishaps lingered over Kroger and Albertsons’s yearslong attempt to complete the biggest supermarket merger in US history, which they announced in 2022. When Kroger said it planned to offload 400+ stores to distributor C&S Wholesale Grocers—which only ran about 160 stores at the time—to gain FTC approval, regulators drew similarities to the not-so-great Haggen situation in 2015. That Haggen move remains “a cautionary tale,” Sujeet Naik, analyst at Coresight, noted.

“It continues to shape how regulators scrutinize large consolidation in the grocery industry today,” he said.

Phil Lempert, founder and CEO of SupermarketGuru, said Albertsons’s unfavorable deal with SuperValu, where a retailer was sold to a distributor, spelled doom for the similar C&S deal. “It’s a different DNA, and the [deals] that have worked really well are where the acquirer has the same DNA,” he said.

In 2024, Albertsons terminated the proposed merger as questions about the divestiture and the competition between the two grocers proved to be an uphill battle, ultimately sounding the death knell for future big deals.

“The collapse of the deal marked the clear end of the megamerger era among grocery chains,” Naik said.

Amazon buys Whole Foods

In 2017, Amazon—at the time a “pure-play online retailer,” as Naik put it—made major moves to enter brick-and-mortar grocery by buying Whole Foods for $13.4 billion. Naik and Lempert agreed the deal initially instilled a sense of panic and fear among traditional grocers.

“Having Amazon get into the grocery business…with all the money, with all the technology, with all the insights that Amazon gathers about customer behavior based on ordering, they didn’t know what to expect,” Lempert said.

That panic proved to be unwarranted as Amazon’s efforts to operate brick-and-mortar retail stores and introduce new technologies have largely faltered, while Walmart has continued to dominate the grocery market and up its e-commerce game.

But Naik noted Amazon’s entrance into offline retail did end up pushing more traditional grocers online, jumpstarting digital transformations, boosting partnerships with third-party delivery players, and ultimately signalling the rise of today’s omnichannel grocery industry.

Ahold Delhaize leads regional consolidation

Amid these deals was a sizable but largely undramatic consolidation when Dutch grocer Ahold and rival Belgian grocer Delhaize unveiled plans for a $28 billion merger that brought East Coast banners like Stop & Shop, Giant, and Food Lion under one parent. After a few divestitures, the deal closed in 2016, and since then, its banners have been largely successful—aside from some struggles at Stop & Shop.

The merger was “smart,” Lempert said, particularly as the combined company continued to run the grocers under their individual banners rather than unite them under one.

“People underestimate the power of regional grocers and the affinity that shoppers have toward them,” he said.

Regional grocery moves have been the more successful deals over the last few years, Naik and Lempert said, like Raley’s purchase of Bashas’ on the West Coast and the merger of Price Chopper/Market 32 and Tops Markets in the Northeast in 2021. More recently, Aldi’s sale of Southeastern Grocers included converting 220 struggling Winn-Dixie and Harveys to Aldi locations, quickly growing the discounter’s presence in the South.

What’s next?

Regional deals will likely be the shape of things to come, Lempert and Naik both noted. Such deals help retailers quickly expand their footprint with little regulatory pushback, and more effectively compete with dominant players—as long as they don’t try to simply mimic them.

“You’ve got to figure out what your niche is and do it really well,” Lempert said. “In grocery, you can’t sit still. You’ve got to keep on moving, and the movement has to be with your consumer.”