The Mars-Kellanova Acquisition is a Win for Shareholders and a Loss for Consumers
Mars, Inc. has announced an agreement to acquire Kellanova (formerly part of Kellogg’s) for $36 billion, marking a significant consolidation in the global snack food industry. While shareholders may be celebrating, at the Center for Responsible Food Business, we see this merger as a troubling development that exemplifies harmful trends in our food system. This consolidation threatens to reduce competition, limit consumer choice, further entrench the dominance of ultra-processed foods in our diets, and thwart moves toward a more sustainable food sector.
A Snack Food Goliath Emerges
The Mars-Kellanova deal will create one of the world’s largest snack food conglomerates, with combined annual sales of about $63 billion and 17 brands worth over $1 billion. This new entity will control a vast portfolio spanning from Mars’ iconic candies like M&Ms and Snickers to Kellanova's popular snacks such as Pringles, Cheez-It, and Pop-Tarts.
While the companies tout this merger as an opportunity for innovation and expanded global reach, we at CRFB see a more concerning reality: the further concentration of market power in an already heavily consolidated industry.
The Hidden Costs of Consolidation
1. Reduced Competition and Consumer Choice
As the number of major players in the food industry shrinks, so does meaningful competition. This merger will increase Mars' global market share in snacking from about 4 percent to 6 percent, solidifying its position as the third-largest snack food company globally, behind only PepsiCo and Mondelēz International.
With fewer competitors, there's less incentive for true innovation, especially in developing healthier and more sustainable alternatives to meet evolving consumer needs. Instead, we're likely to see more focus on brand extensions and marketing gimmicks rather than substantive improvements in product offerings.
2. Increased Pricing Power
The newly formed snack giant will wield considerable influence over pricing. As we've seen in recent years, food corporations have used their market power to raise prices beyond what inflation and supply chain issues would justify, contributing to record profits at the expense of consumers' wallets.
With even greater market share, Mars-Kellanova will have more leverage to implement price hikes, potentially exacerbating the ongoing issue of food price inflation that's already straining household budgets.
3. Squeezing Out Smaller Competitors
This merger will make it even more difficult for smaller companies, including those offering healthier options, to gain market share. The combined resources of Mars and Kellanova will allow the new company to dominate shelf space, advertising, and distribution channels, creating nearly insurmountable barriers for new entrants and smaller brands.
This is particularly troubling as many innovative, health-focused companies already struggle to break through in a market dominated by giants pushing ultra-processed foods.
The Problem with Ultra-Processed Food
The Mars-Kellanova merger isn't just about market dynamics; it's about public health. Both companies are known for their highly processed, often unhealthy snack foods. This consolidation threatens to further entrench the dominance of ultra-processed foods in the American diet, working against efforts to improve public health through better nutrition.
Twix and Mars candy bars, products of Mars Inc., are among the ultra-processed foods prevalent in America that contribute to the chronic disease epidemic.
What exactly are ultra-processed foods, and why are they so concerning?
Ultra-processed foods are industrial formulations that have been significantly altered from their original form. They typically contain added fats, starches, sugars, and artificial additives that make them hyper-palatable and shelf-stable. Examples include many of Mars' and Kellanova's flagship products like candy bars, chips, and packaged snack cakes.
The health implications of a diet high in ultra-processed foods are severe:
Increased risk of chronic diseases: Regular consumption of ultra-processed foods is linked to higher rates of obesity, heart disease, and type 2 diabetes.
Low nutritional quality and nutrient deficiencies: Despite being calorie-dense, these foods are usually lacking in the most important nutrients, leading to malnutrition even in the context of overconsumption.
Addiction-like eating patterns: Ultra-processed foods are often formulated to be highly rewarding to the brain, leading to overconsumption and difficulty in moderating intake.
Inflammation: The additives and altered nutrient profiles of these foods can promote chronic inflammation in the body, a root cause of many diseases.
Disruption of gut health: Many ultra-processed foods lack the fiber and beneficial compounds found in whole foods, potentially harming the gut microbiome.
By creating an even larger ultra-processed food giant, this merger threatens to make it harder for consumers to make healthier choices and for public health initiatives to combat diet-related diseases.
Environmental Concerns and Corporate Resistance
Consolidation in the food industry doesn't just affect consumers and market dynamics; it also has significant implications for sustainability efforts. As companies like Mars-Kellanova grow larger, they often become more resistant to making meaningful changes to improve their environmental impact. And changes are desperately needed; just this year, Kellanova was linked to illegal deforestation in Peru's Amazon rainforest through its palm oil supply chain.
Palm oil is grown on plantations in tropical regions and is largely used in consumer products like snack foods and candy bars.
The larger the food company, the more political influence it wields. Large food conglomerates and the trade groups that represent them have historically spent millions lobbying against climate action and other environmental protection measures. Their vast resources enable them to greenwash unsustainable practices while evading genuine change and actively obstructing meaningful policy reform.
This consolidation of power makes it increasingly difficult for policymakers and consumer and environmental advocates to push for necessary changes in our food system to address urgent challenges like climate change, deforestation, and biodiversity loss. As the food industry becomes dominated by fewer, larger players like the Mars-Kellanova or proposed Kroger-Albertsons behemoths, the path to a more sustainable and environmentally responsible food system becomes increasingly treacherous.
A Call for Responsible Business Practices and Stronger Oversight
At CRFB, we believe that food companies have a responsibility to contribute positively to public health and consumer well-being. Mergers like Mars-Kellanova and Kroger-Albertsons move us in the opposite direction, prioritizing market dominance and profit over genuine innovation and health-conscious product development.
This merger highlights the urgent need for stronger regulatory oversight in the food industry. Regulators should consider not just traditional antitrust metrics but also the broader implications for public health and consumer choice when evaluating such mergers. We urge policymakers to strengthen antitrust enforcement and consider the cumulative effects of industry consolidation on consumers, smaller businesses, and public health.
