The $US17 billion Amazon bid for Whole Foods – America’s biggest organic food retailer – has grabbed all the headlines in the past month, triggering a spate of stories of fear and loathing among supermarket and other food retailers – and then backtracking on the alarmist nonsense as the sources realised its not all doom and gloom.
But amid all the hundreds of thousands of words, hours of TV and online time on what the Amazon deal means, none of the gurus really looked at the impact on food suppliers to Whole Foods. Yes, some stories claimed the Amazon move was bad news for food companies (whose shares fell).
Some of the rubbishy stories appeared in Australian media and went unchallenged and became ‘gospel’
But may of these claims were nonsense, made up by alarmists. The real story from the Whole Foods deal is that Amazon’s 10 years of trying to be a biggie in groceries and food has been a bust.
Whole Foods has around 1.2% of the US grocery market, Amazon around 0.2% – the combined stake of between 1.4% and 1.5% of a near $US700 billion a year – will make the combined group America’s 5th biggest grocery operation – with Wal Mart.
The venerable Campbell Soup company obviously didn’t listen. It has just announced the $US700 million (nearly $A1 billion) purchase of Pacific Foods, one of the biggest suppliers of packaged organic to Whole Foods and other retailers.
Pacific’s soups, canned products, stocks and similar products are prominent in Whole Foods stores ad have built a reputation for quality and value among those who buy organic regularly (which is ore and more younger consumers). Smaller food chains and markets in cities like New York, Washington, LA and Chicago stock Pacific Foods products
Besides soup, Campbell owns brands including Pepperidge Farm, V8, Swanson and Prego (and Arnotts in Australia -Tim Tams). Including Pacific it has now bought five organic food makers in the past five years.
Campbell like its peers (Conagra, General Mills, Coca Cola, Kellogg etc) has been trying to burnish its image as a wholesome food company as it battles consumer displeasure with packaged foods generally, but especially those with a lot of salt and sugar.
Campbell’s other buys have included the organic baby-food maker Plum and Garden Fresh Gourmet, which sells salsas and hummus. Pacific had sales of $US218 million in net sales in the year to May 31, Campbell said. No profit was given, but just on sales, Campbell seems to be paying a lot of money.
Oregon-based Pacific will be folded into Campbell’s Americas simple meals and beverages division once the acquisition is done.
Pacific’s chief executive and co-founder Chuck Eggert will stay on “as a supplier of key ingredients through his family farms,” the two companies said.