Year In Grocery: Dead Deals & Retailer Resurrections

The sliding glass doors of grocery retail seemed to be closing a lot in 2024; yet, there remained a few openings — mostly re-openings — that helped characterize the year. The proposed Kroger-Albertsons merger continued to be the biggest story in grocery retail while the abrupt bankruptcies — and resurrections — of next-generation retailers brought into focus the challenges of doing business in food and beverage.

The Book Closes On Kroger-Albertsons

The over two-year effort to merge two of the country’s biggest conventional grocery chains has ended amid a torrent of lawsuits that have plagued the deal from the beginning. The $24.6 billion Kroger-Albertsons deal which began in 2022 was originally intended to close in early 2024; instead, this year was marked by legal battles with state attorneys general and the Federal Trade Commission (FTC).

AGs in both Colorado and Washington opened the year with lawsuits intended to block the Kroger-Albertsons deal. In late February, the FTC completed its review of the proposed merger and filed its own lawsuit claiming it would eliminate competition for consumers and would “lead to lower quality products and services.”

In response, the two grocery chains announced in April they had added 166 stores and assets (valued at $2.9 billion) to the 650 stores promised to C&S Wholesalers in the original divestiture plan.

On December 10 it all came to a head, when a U.S. District Court judge in Oregon ruled in favor of the FTC, essentially killing the deal on the spot. The next day, Albertsons announced it was suing Kroger for willfully breaching the companies’ merger contract. Albertsons’ lawyers alleged that Kroger failed to “take ‘any and all actions’ to secure regulatory approval” for the merger. The legal team lobbed a variety of claims that Kroger had repeatedly refused to divest additional assets, ignored regulators’ feedback, rejected stronger divestiture buyers and failed to work with Albertsons to secure antitrust approval.

Along with responding to Albertsons’ lawsuit as “baseless,” Kroger reported that its next move was to initiate a $7.5 billion accelerated share repurchase program. Although the deal appears to be dead, there will be more legal jockeying to cover in 2025 and a new administration could potentially bring a more welcoming environment for grocery retail mergers.

From Bankruptcy To Rebirth

The past year has also been characterized by the failure and second chance for Boisson and Foxtrot coinciding along similar timelines.

Adult non-alcoholic (ANA) retailer Boisson started 2024 with an optimistic growth plan. Under new CEO Sheetal Aiyer, the company was touting a plan to expand its national wholesale operations and seemed well-funded thanks to a $5 million bridge round in September 2023 which included investment from Pernod Ricard’s VC arm Convivialité Ventures.

In March, the tone changed dramatically as rumors began to circulate on social media platforms that Boisson was closing its doors. By the following week, the business had filed for Chapter 11 bankruptcy and was “restructuring” as it officially closed all nine locations in New York, Los Angeles and Miami.

By the time some of the dust cleared in July, Boisson announced a new majority investor: the family office behind Studio Beverage Group. Co-founder Nicholas Bodkins was brought on as chief brand officer as well as Studio Beverage Group CEO and former Southern Glazer’s exec Arie Gurevitch was appointed Boisson’s new CEO and Clyde “Tripp” Rea as its COO.

In a panel discussion on the state of ANA retail at BevNET Live Summer 2024, Bodkins spoke about the mistakes Boisson made in growing too quickly and how the new leadership team was envisioning its second act. Although Boisson has focused its resurrection story on being a wholesaler, it has maintained its ecommerce business, despite the vocal dissatisfaction from some suppliers. Last month, it launched a new “functional” website, Buzz by Boisson, that specializes in cannabis beverages and other mood-enhancing alcohol alternatives.

In a similar springtime surprise, Chicago-based convenience store concept Foxtrot also shut its doors with little notice. Less than six months removed from its November 2023 merger with natural grocery chain Dom’s Kitchen and Market, Outfox Hospitality (the umbrella organization of Foxtrot and Dom’s) suddenly went dark in late April. The failure of the business was so abrupt that many employees were informed of the closure as they were opening stores on April 23.

Over the ensuing months, Foxtrot went to auction, was acquired by Further Point Enterprises for $2.2 million and prepared to reopen some former locations. In September, the newly-named Foxtrot Café & Market unveiled its first reopening in Chicago’s Gold Coast neighborhood. The revamped store concept is positioned even more toward coffee drinks and order-at-the-counter food, while still maintaining the appeal of a retail environment where disruptive CPG brands can get their start.

Since September, Foxtrot has opened four other locations in Chicago with another two stores set to open in Dallas, Texas next month.

Is Smaller Better?

Whether it’s a solution to food deserts in urban areas or just an upscale bodega, Whole Foods made another attempt at a small store concept earlier this year.

Dubbed the Whole Foods Market Daily Shop, the mini-markets carry mostly private-label products, range between 7,000 to 14,000 sq. ft. and are initially located throughout Manhattan. It is a similar strategy to what Whole Foods launched in 2019 (also in New York City).

Trader Joe’s has leaned into the trend with its Pronto mini-markets also in Manhattan. The strategy is following what Foxtrot or PopUp Grocer have built in its early years, appealing to urban shoppers with a modernized corner store vibe. The move into small-concept also leans into private-label prioritization, an increasingly popular mechanism for retailers to capture consumer spending while benefiting margins.

New England-based Big Y has been investing in its own Express concept in downtown areas of New Haven, Conn. and Springfield, Mass. this year. Whether we see conventional retailers jump into the small store fray remains unknown, but another natural channel grocery has seen advantages to diversifying its store count with a convenience-oriented experience. Sprouts has been expanding into small-format since 2022 with visits to the smaller stores increasing by nearly 50.0% since January 2022, according to Placer.ai. BJ’s Wholesale Club has also been testing a smaller store in Warwick, R.I. since 2022 with year-over-year growth.