Why Buy Local? Part 3: Feeding the Beast
This article is part three in a series on why we should support our local businesses. In Part 1: The Illusion of Choice, we exposed that only several big corporations own dozens of “brands”, giving consumers this illusion of choice. In Part 2: Big Corporate “Monopolies”, we addressed the stranglehold of corporate monopolies on the carbonated beverage and meat processing industries, plus their negative impact on small business and communities.
Today, we’ll investigate who owns these big corporations and controls our favorite brands. Let’s return to the topic of carbonated soft drinks. The Big Three - Coca-Cola, PepsiCo, and Keurig Dr. Pepper - own a staggering 92.9% of the market. But who owns them? The answer might surprise you: Institutional Investors like Berkshire Hathaway, Vanguard Group, and Blackrock.
According to Yahoo Finance, at the time of this writing, 62.95% of Coca-Cola’s shares are owned by institutions | PepsiCo – 76.83% | Keurig Dr. Pepper – 67.68%.
What is an Institutional Investor?
According to Investopedia, an Institutional Investor is a company that invests money on behalf of other people. They consist of commercial banks, hedge funds, mutual funds, pensions, endowments, and insurance companies. They often buy and sell substantial blocks of stocks, bonds, or other securities (i.e., 10,000 or more) and are considered the “whales on Wall Street.” Institutional Investors make their money by charging fees and commissions to their clients. Incidentally, “Institutional investors face fewer protective regulations compared to average investors because it is assumed the institutional crowd is more knowledgeable and better able to protect themselves.”
In other words, Institutional Investors exist only to make money.
Who owns the Big 3 in carbonated beverages?
The top three institutional holders are Berkshire Hathaway, Inc., Vanguard Group, Inc. and Blackrock, Inc.
The top three are Vanguard Group, Inc., Blackrock, Inc., and State Street Corporation.
The top three institutional holders are Capital World Investors, Vanguard Group, Inc., and Blackrock Inc.
Look beyond the top three for each brand and you see the same investors: Blackrock Inc., State Street Corporation, Vanguard Group, Inc., and JP Morgan Chase & Company.
Yes, I know, it’s only pop (or soda depending on where you’re from). Who cares, right? Wrong. Don’t take my word for it. Look up the Institutional Investors in all the other publicly-traded major food corporations we identified in previous articles in this series. And don’t stop there. You’ll find the same scenario in all areas of our lives: technology, travel, news media, entertainment, pharmaceuticals, etc.
How Do You Shop Locally?
Do you like to shop at Walmart? It’s certainly convenient when you can pick up just about anything you need in one store, including grocers. Did you know that 34.93% of Walmart’s shares are held by Institutional Investors? The top three are Vanguard, Blackrock, and State Street. Or maybe Target where 81.61% of its shareholders consist of Institutional Investors, including Vanguard, Blackrock, and State Street.
Maybe you frequent Lowe’s or Home Depot. (Guilty! I’ve always loved shopping at Lowe’s.) 76.40% of Lowe’s shares are held by Institutional Investors, and Home Depot’s Institutional shares are 72.51%. You see the same shareholders in the images below.
Let’s not forget about Amazon.com! It’s so convenient to shop from home, and with a few clicks of your mouse (or smartphone), your purchase can be on your doorstep the next day. I hate to disappoint, but 62.82% of Amazon’s shares are held by Institutional Investors. And if you guessed the top three, you’d be correct if you said Vanguard, Blackrock, and State Street.
Why Should We Care?
Because Institutional Investors are driven by one goal: To maximize profits and shareholder value, no matter the cost to human, environmental or community health (unless forced or incentivized to do so). They're not concerned with the well-being of small businesses or local communities. Their business models are designed to stifle competition, dictate prices, and influence government and commercial policies and practices. They have their hand in every area of our lives: consumer goods, food supply, technology, travel, media/entertainment, healthcare, pharmaceuticals, etc. And in recent years, these investment giants have been buying up single-family homes. “These firms tend to compete for homes that middle-income families seek.”
We Are the Solution
Where we spend our money matters. We need to take back control by supporting our local businesses and keeping our money within our communities. We must stop feeding the beast and start nourishing our own backyard. It's time to recognize the true power brokers behind the scenes and make a conscious effort to shop local, shop small, and shop smart. The future of our communities depends on it.
Together, let’s stop feeding the beast!