Welcome to The Business Buying Academy with Sieva Kozinsky.

🔑 From pushing a tea wagon to raking in billions.

They started by pushing a wagon down a crowded Manhattan street to sell tea.

Within a few decades, they invented the modern grocery store and became one of the biggest businesses in the world.

This is the story of the Great Atlantic & Pacific Tea Company.

Known more commonly as A&P, the business started in 1859 on the busy streets of Manhattan selling tea and later coffee and eventually became one of the largest businesses in the world.

Let's dive in.

In 1859, George F. Gilman and George Hartford opened a small tea business on Vesey Street in New York City.

By the late 1860s the company operated multiple stores in and around NYC. Initially the business was known as The Great American Tea Company, but they renamed it in 1869 to the Great Atlantic & Pacific Tea Company.

The name capitalized on the most exciting trend in America at the time: Transcontinental railroad lines connecting all parts of the country for commerce.

At first the stores sold coffee and tea.

Then they expanded by glassware, home goods, and even lithographs (printed art works).

But eventually they found the category the business would be known for around the country: Groceries.

Here's what the early 1900s had in store for A&P:

• By 1900 A&P had roughly 200 stores and annual sales of about $5.6 million (about $220 million adjusted for inflation).
• Headquarters moved from Manhattan to Jersey City, New Jersey.
• A&P began limited manufacturing (like baking powder) and private-label products.

The Economy Store Revolution and Explosive Growth (1912–1930)

Everything changed in 1912 when John Hartford tested the “economy store” format in Jersey City.

These were small, no-frills outlets on secondary streets with standardized layouts, and minimal staffing (often one or two employees).

As opposed to many retail stores of that era, they didn't offer credit sales and they didn't offer free delivery (this was common at the time in dense neighborhoods as shoppers usually lived within a few blocks of the stores they purchased from).

A&P was a discount retailer before the term really existed.

To cut costs further, they often signed short-term leases (to minimize losses on a bad location).

The goal was high volume on thin margins rather than high markups per sale.

The model scaled rapidly:

• 1913: 585 stores
• 1920: more than 4,500 stores
• 1930: peak of 15,700 stores across much of the eastern and midwestern U.S. with small clusters in California and Washington.

Sales reached $1 billion by 1929, putting A&P into elite company with businesses like Standard Oil, General Motors, Ford Motors, and U.S. Steel.

By 1930, they were roughly twice the size of Sears and four times Kroger.

Unlike most of the companies we talk about in this newsletter, A&P was actually well positioned for the Great Depression.

Being debt-free and having the lowest prices gave it a lot of flexibility.

They were even profitable.

From 1929 through 1932, during the early Depression, A&P generated about $110 million in after-tax profits.

A&P vertically integrated heavily:

• Operated bakeries (later a major profit center), canneries, dairies, and coffee roasting.
• Owned manufacturing plants to produce packaging.
• For materials they didn't make on their own, they bought directly from manufacturers in huge volumes, bypassed traditional wholesalers, and used its own warehouses and distribution.

All of these are standard practices for any national grocery chain today, but at the time A&P was breaking new ground.

A&P captured about 10% of U.S. grocery spending at its peak in the 1940s.

Supermarket Transition and Continued Dominance (1930s–1950s)

Independent operators (King Kullen, Big Bear) pioneered large self-service “supermarkets” in the early 1930s.

A&P responded by opening its first supermarket in Braddock, Pennsylvania, in 1936 and rapidly converted their other stores.

Between 1936 and 1940 it roughly halved its store count (to just over 6,000) while increasing sales by more than 50% through larger-format stores.

By 1950 A&P operated around 4,500 larger stores (plus some remaining smaller ones).

It remained the largest U.S. grocery retailer from roughly 1915 through 1975 and the largest U.S. retailer of any kind until about 1965.

In 1958 sales surpassed $3 billion for the first time, with profits of $53.9 million; the company went public that year while the Hartford family and foundation retained control.

A&P shaped nearly every major feature of today’s supermarket and discount grocery industry:

• High-volume, low-margin retailing: Operating on thin gross margins (John Hartford reportedly viewed anything above ~2% net as excessive because it meant the company was not passing savings to customers) forced relentless cost control and scale efficiencies, precursors to Walmart, Aldi, and modern discounters.
  ​
• Cash-and-carry / self-service: Eliminating credit and delivery lowered costs. A&P also flipped to the self-service model we know today, where shoppers browse the store shelves and pick out their own items.
  ​
• Vertical integration and private label: Manufacturing its own products and controlling distribution reduced costs and built brand loyalty. Private-label strategies remain central to chains like Kroger, Costco, and Aldi.
  ​
• National chain scale and standardization: Uniform store formats, centralized buying, and national branding created economies of scale that independent “mom-and-pop” stores could not match. This accelerated the shift from fragmented local groceries to organized chains.
  ​
• Direct manufacturer relationships: Bypassing wholesalers and negotiating volume discounts became standard practice.
  ​
• Affordability and assortment: By making a wider variety of foods cheaper and more accessible, A&P improved ordinary Americans’ diets and nutrition while pressuring smaller competitors.

These innovations sparked intense political backlash.

Local governments called for chain-store taxes.

There was even a federal criminal case accusing A&P of selling food “too cheaply”, leading to antitrust investigations.

Decline and Final Years (1960s–2015)

After the deaths of John Hartford (1951) and George Hartford (1957), control shifted.

Heirs and the Hartford Foundation prioritized dividends over reinvestment.

A&P was slow to follow customers into the suburbs, update aging urban stores, or match competitors’ larger, more modern formats and merchandising.

In the early days, management was quick to adjust to new trends.

As the company aged, that changed.

Sales stagnated while rivals grew.

The company closed hundreds of stores in the 1970s (going from 3,400 to about 2,000 during the decade).

In 1979 the German Tengelmann Group acquired controlling interest.

Under new management the business was cut further, returning to profitability by the early 1980s (under 1,000 stores).

But they began acquiring other dying brands and accelerated the death spiral.

A&P filed for Chapter 11 bankruptcy in 2010, emerging as a privately-held business in 2012.

But the same problems persisted.

Then the business filed again in July 2015 with roughly 296 stores and about 28,500 employees.

Remaining stores were sold to Albertsons (and some other buyers) or closed; the last doors shut by 2015, ending more than 150 years of operation.

Sieva

What did you think of today's newsletter? Rate this newsletter using the poll below:

Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.

​​