Chances are that you’ve never stopped to think about how supermarkets choose what products they sell. You’re used to seeing the brands that everyone knows (e.g. Kellogg’s Rice Krispies), their generic knock-offs (Wegmans Crispy Rice Cereal), and maybe some allegedly healthy or organic versions (Nature’s Path Rice Puffs).
That's because consumers want familiar, cheap, and feel-good options, right? Not quite. The truth is actually much shadier.
Product placement is dictated by how much food companies pay for it, not consumer demand. There are exceptions, in which retailers give breaks to new products that they think customers will flock to—but, generally, supermarkets demand fees.
If that sounds harmless, consider how much money a corporation like Mondelēz International (owner of Kraft, Nabisco, and Cadbury) has available to pay for prominent shelf slots versus a new company trying to break into the food industry. The practice discourages entrepreneurship and restricts competition, thereby limiting consumer choice.
It's generally hard to estimate placement fee costs, since they vary based on region, store chain, food category, and the deal that the company strikes with the retailer to incorporate discounts. The most expensive spaces, though, are checkout aisles, where the average retail chain charges $5 per inch, multiplied by the number of aisles in the store and by the number of stores that will stock the item, to secure a few months of placement.
That means those six-inch cardboard boxes that display candy bars could be costing their companies $25,000 in a single supermarket chain. Getting in the checkout aisles of the 50 biggest chains for just a few months could total over $5 million. The chances of a small company having that kind of budget are less than slim.
In case you think this is all just a conspiracy theory and speculation, check out this report published by the Center for Science in the Public Interest in September. It's rife with examples of how much companies are paying as well as all of the consumer manipulation that occurs via in-store advertising and promotions.
One case in the report describes how Clemmy's, a small sugar- and lactose-free ice cream manufacturer, went bankrupt last year. Although its products sold fairly well, Clemmy's failed after it futilely sued Nestlé (behind Häagen-Dazs, Dreyer’s, Edy’s, Skinny Cow, Drumsticks) in 2013 for its attempts to limit the company's customer exposure.
As "category captain" in the frozen dessert aisles of various stores, Nestlé dictated the product layout of its sections. The corporation recommended that the stores only carry 2-3 Clemmy's flavors and then had those flavors placed on lower shelves or even behind freezer-door hinges to prevent customers from seeing them
Clemmy's had paid over $1 million to get into just a couple of supermarket chains and even entered into deals to provide free flavors in exchange for shelf space. The suit was dismissed in 2015, Clemmy's was ejected from thousands of stores, and the company quickly went under.
In addition to decreasing the competitiveness of the food market, having big companies pay to determine store layouts leads customers to buy less-healthy products, since the best-sellers of popular brands tend to be higher in sugar, salt, and/or fat. If you're trying to find healthier products or support small companies, look on the highest and lowest shelves (less ideal placement) or go to smaller retailers, whose fees are lower than those of nation-wide chains.
Obviously, I'm not saying you should never buy Oreos again because companies like Mondelēz are evil. I was just so shocked when I learned about the "rigged" report that I felt the need to publicize it. All consumers deserve to know how businesses are manipulating their options.