The antitrust-activist Federal Trade Commission (FTC) under the Biden administration and chair Lina Khan moved earlier this year to block a merger between grocery oligarchs Kroger and Albertsons. Its motivation is to preserve competition (such as it is) in traditional food shopping.
There’s a whole debate about whether choice in supermarkets is so relevant when many alternatives have arisen, both online and in physical stores from Walmart to Whole Foods to Trader Joe’s to Aldi and Lidl and even dollar stores. The marketplace, at least in population centers, does seem to keep offering ways to skip the old standbys.
But given the FTC’s current bent (it also has acted to bust a merger in branded handbags), where might concerted restriction of retail monopoly lead? Lessons can be found in America’s century-old regulation of alcoholic-beverage sales. In this case, I’d point to the curious case of New York state.
Other states have their own quirks, but New York’s general policy is to restrict wine and hard-liquor sales to specialized shops (often “mom & pops”) while leaving beer to food stores. As always, there’ve been lots of exceptions written into the law–the grocers can sell wine from New York grapes, or flavored wines, or wine-based coolers. But, in general, the distinctions have held, and the wine-liquor stores are well organized into a lobby that has fought vigorously to keep the boundaries. (That’s the reason, for example, that you cannot buy Costco’s popularly-priced Kirkland house-brand wines in New York–because Costco cannot deal in wine.)
There’s a flip side to this standoff: the liquor shops are prevented from selling food, even the snacks one might naturally serve with a drink. And they can’t, therefore, feature non-alcoholic beverages, even mocktails. Today’s article in the New York Post notes that the “package stores” are contesting this limitation, pleading poverty because alcohol-for-home sales are down (at least from pandemic binge levels) for various reasons. The back-and-forth in the Post’s account gives you a flavor for how petty this line-drawing has become.
Are consumers a winner from New York’s attempt to maintain an independent retail channel from being swept up by Big Grocer? (As well, of course, as to impose control on booze through special licensing.) Or might a more hands-off approach make it easier and perhaps cheaper to shop? If so, what might the nationwide lesson be for letting Kroger, Albertsons and their various rivals sort things out?