Kroger Raised Milk, Egg Prices ‘Significantly Higher’ Than Inflation, CEO Testifies

Kroger Co. raised its milk and egg prices more than necessary to account for inflation, the company’s chief pricing officer said in testimony during a trial involving the U.S. government’s effort to block the grocery chain’s takeover of rival Albertsons Cos.

In March 2024, Andy Groff, senior director of pricing at Krogers, sent an email to his bosses admitting that the company had raised prices more than necessary to adjust for higher costs.

“For milk and eggs, retail inflation was much higher than cost inflation,” Groff wrote.

Groff testified about his email as part of a federal antitrust lawsuit by the Federal Trade Commission and a group of states seeking to block Kroger from buying Albertsons. U.S. District Judge Adrienne Nelson in Portland is expected to rule on whether to halt the $24.6 billion acquisition.

Kroger operates King Soopers grocery stores in Colorado.

Kroger and other grocery retailers have benefited from periods of higher inflation by passing on price increases to consumers. Supermarket operators raised retail prices rather than absorbing all the increases, and higher food prices led to sales jumps until shoppers pulled back on spending.

Antitrust regulators say the Kroger-Albertsons deal will raise consumer prices as the companies compete in hundreds of markets across the U.S. Grocery executives say the acquisition will lower prices and improve their competitive position against retailers such as Amazon.com Inc. and Walmart Inc.

The company’s goal is to “pass inflation on to consumers,” Groff said in response to questions about his email.

Kroger wants to be competitive in what it calls “everyday essentials” — the five items customers buy most often: milk, eggs, sugar, bananas and iceberg lettuce, Groff said. Each week, Kroger compares its prices for those items to three others: Walmart, Aldi Inc. and a traditional retailer in the market. Albertsons is a “key traditional retailer” in each market where it competes with Kroger, Groff said.

Kroger has entered the dairy market over the years and now operates more than a dozen dairies. Egg prices reached record highs in early 2023 in the U.S. because of bird flu, which killed tens of millions of birds and squeezed supplies.

(With assistance from Jaewon Kang.)