By Jesse Newman
The price of a bag of coconut-cashew granola at Whole Foods jumped last year from $5.99 to $6.69. Why that happened defies simple explanation.
The granola maker, Wildway Foods, said the cost of making the cereal hasn’t gone up that much, and that it isn’t pocketing more profit. It jacked up the price, it said, in large part to offset fees that piled up from a little-known link in the supply chain: grocery distributors. There were charges for processing grocery promotions, others for potential spoilage and still more related to alleged shipping glitches.
Rising prices, especially in the supermarket, have vexed consumers, drawn scrutiny from regulators and emerged as a central issue in the presidential race. Donald Trump has blamed Kamala Harris and the Biden administration, and Harris has pointed a finger at grocery chains and food companies.
George Milton, who runs a hot sauce business in Austin, Texas, said consumers are frustrated because it isn’t clear to them why many food prices are so high. “Is that price gouging or costs going up for distributors or retailers or farmers? I have no idea,” he said. “Nobody does.”
Big food companies have increased prices in recent years for everything from cereal to ketchup to potato chips, citing higher costs for ingredients and labor, among other things. Many small manufacturers that have raised their prices have another explanation. They say they also are being squeezed by the distributors who act as gatekeepers to many supermarkets.
Distributors are the middlemen of the grocery business. They buy products from food makers—many of them too small to run their own distribution networks—then store, sell and ship them to supermarkets. A small number of them, including KeHE Distributors, C&S and United Natural Foods, or UNFI, sell to grocery stores nationwide.
When Milton started his hot sauce business 12 years ago, he delivered the condiment himself by truck, dropping boxes at the back door of local food co-ops in exchange for a check.
These days, the chief executive of Yellowbird Foods relies on national distributors to ship his product to stores, a process he said is riddled with obscure costs that make it hard to know what, if anything, he’ll be paid.
“That’s a really tough way to run a business,” Milton said. “But what is the alternative, that I UPS it from one place to another?”
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