Ruffles, or Lays? Life Cereal, or Cap'n Crunch? SoBe Lifewater, or Aquafina?
When you visit the grocery store with those choices on your mind, you may think you're choosing among different brands, but in fact, you're just choosing between various flavors of gigantic snacks and drinks maker PepsiCo .
Pepsi, you see, owns all these brands. Just like Kraft owns both Oscar Mayer and Polly O. Like Johnson & Johnson owns Lubriderm and Aveeno, Coca-Cola owns Coke and Dasani, and Procter & Gamble owns Dawn, Downy ... and Iams dog food.
Fact is, out of the dozens -- scores, hundreds -- of brands you browse every day in the grocery store, the vast majority of them are owned by just 10 multinational megaconglomerates, as laid out in this graphic from the folks at NaturalNewsBuzz:
These include the five companies I named, plus Nestle, General Mills, Kellogg, Mars, and Unilever besides.
If you can't beat 'em, buy 'em
How is it that these 10 companies control so much of what we eat, drink, and wash up with after eating and drinking? In some cases, they did it through sheer, unadulterated, purely American genius -- inventing great products to improve people's lives, marketing them brilliantly, and reaping the rewards.
Johnson & Johnson, for example, invented the Band-Aid bandage back in 1920 and has been patching up boo-boos and ouchies with it ever since. Coca-Cola, whose history dates to a Confederate Army officer and amateur confectioner back in the mid-1800s, was a company literally built up around the name of its signature product.
More frequently, though, as time has gone by, these companies have acquired their brands by buying up the companies built by more creative people -- such as when bleach behemoth Clorox spent $925 million to acquire up-and-comer natural-lip-balm maker Burt's Bees in 2007. Or when ConAgra shelled out nearly $5 billion to acquire private-label foodmaker Ralcorp earlier this year.
Necessity is the mother of acquisition
Why do these companies buy competing brands rather than just building a better mousetrap of their own? Here's why.
When you're already a big business, like Coke, which sells $48 billion worth of carbonated sugar water (and corollary brands) annually, it's awful hard to get customers to drink more of your product, year after year, and thus keep those profits growing at the 9% annually or so that Wall Street demands. (If you're PepsiCo, already at $65.5 billion in annual sales, it's even harder.)
Sure, you can try to grow sales by inventing other, newer, and better products to improve customers' lives -- but that's hard work, and no sure thing at all. (Cough, "New Coke," cough-cough, "Crystal Pepsi.")
Often, if you want to keep sales and profits growing, the better and surer bet is to just go out and buy a known, good thing, rather than sink millions of dollars into trying to invent a better thing.
That's what these companies have done, therefore. That's what they're still doing. And that's why. the next time you head to the grocery store, no matter how much you buy, chances are good that your shopping dollars will all wind up in the bank accounts of only 10 companies.
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This article was originally published as The Mystery of Groceries: Do All Brands Come From the Same Place?on Fool.com
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