With Friday’s blockbuster news of Amazon buying Whole Foods Market for nearly $14 billion, I gave my own analysis on Organic Insider about how this would impact the organic food industry.
Yet, wanting to hear from the people who actually run organic food companies, I reached out to a handful of CEOs and founders, all of whom sell their products to Whole Foods, to see what they think of the deal.
It was important for me to get insight from CEOs and founders of small, medium and large organic brands since companies of varying size may view this acquisition in a different light.
They shared with me their take on the acquisition, what it means for the industry and consumers, and how it might impact their business. Here is what they had to say.
JEFF CHURCH, CEO AND CO-FOUNDER OF SUJA JUICE
Amazon buying Whole Foods is a huge deal. We’ve been playing in this space for over five years now and have seen the consumer and retailer shift towards healthier, better products. Organic has been growing at double-digit rates, and this acquisition just validates that organic is the future.
At Suja, it’s been our mission to democratize organics and make it not only widely available but at a price more accessible than ever before. Currently, only a small percentage of U.S. food sales is of organic products and yet it was reported that over 45% of the U.S. population actively tries to add organic foods and beverages to their diets.
This acquisition is so important because it will start to bridge that gap. Additionally, I think the opportunity to streamline and focus on availability and pricing could really help reduce the cost of organics for the general masses.
Given all of the other companies that were in the running, we truly feel that Amazon represents the most progressive and dynamic opportunity for Whole Foods. You now have John Mackey, who has really led this mainstream organic movement and is rooted in the idea of real food, teaming up with Jeff Bezos, the powerhouse who has changed the way consumers shop with so much emphasis on consumer satisfaction.
I also expect to see a possible seismic disruption or acceleration in the home delivery of grocery products. I could see Amazon converting their Amazon Fresh concept to a Whole Foods Fresh and leveraging the strong Whole Foods brand name to reach consumers throughout the country.
Our only concern is that typically during the acquisition process things can get slowed down. Our relationship with Whole Foods Market has been heavily focused on innovation and new product development, so we just hope we’re able to continue to partner together during this time of transition.
ARRAN STEPHENS, FOUNDER OF NATURE’S PATH
With the purchase of Whole Foods by Amazon, we are entering uncharted territory. I now believe Amazon was the better choice, for what was apparently an inevitable sale, rather than with another giant food retailer, which might have concentrated too much power in one food entity.
I have profound regard for Whole Foods for bringing organic foods into the mainstream in a beautiful way. They have been and continue to be a very strong partner for Nature’s Path. I admire John Mackey and his vast team (90,000 employees) for what they have achieved…and for what lies ahead.
My relationship with Whole Foods goes back to its beginning, when my earlier company, Lifestream, supplied them with our first product, sprouted organic Essene Bread (later known as Manna Bread).
It’s been my privilege to have been involved in the organic movement since 1967, farming, educating, marketing and processing what has become the largest independent organic breakfast foods and snack brand in North America. Nature’s Path/Que Pasa has a strong partnership with Whole Foods and will continue to work with them and Amazon (also a growing customer) in a rapidly changing marketplace, to bring the best in innovative, organic, plant-powered foods to the world.
JOHN FORAKER, PRESIDENT OF ANNIE’S
The acquisition of Whole Foods by Amazon is a total game changer for the organic industry, and especially for emerging organic brands. Organic over-indexes dramatically in online purchases, and this should allow organic brands to reach every corner of the country, and eventually the world. This is particularly important because getting onto the shelf at retailers nationally is both very challenging and expensive.
One of the biggest untold stories about the Amazon/Whole Foods combination is the potential it will have on food justice, access, and availability issues in poor and underserved communities everywhere. There are millions of Americans without access to healthy food. They can buy 44’s, Cheetos, and cigarettes, but try finding an organic tomato.
Amazon’s distribution network paired with Whole Foods’ cultural commitment to healthy food is going to be powerful. Organic food on your doorstep in hours, no matter where you live, from Beverly Hills to Compton. I think Whole Foods’ commitment to healthy eating, as well as its ability to drive lower, more accessible pricing, offers amazing potential to help solve this difficult societal issue. It is not a panacea, as it will require many other things, but it offers incredible potential.
I have no concern that Whole Foods will diminish its standards in any way. If anything, broader availability of foods with Whole Foods’ very high standards should raise the bar for the entire market and retailers everywhere, in order to compete. That will be good for farmers, ranchers, and the sustainability of our food supply.
Amazon’s purchase of Whole Foods is a bold move that for sure has every food company evaluating and asking themselves what this means for their business. It will be enormously disruptive, and as always, there will be winners and losers. Other grocers that up their game and truly embrace high quality and organic should continue to do well.
GALIT LAIBOW, CEO AND CO-FOUNDER OF FOODSTIRS
This is exciting news for the organic and free-from foods industry. Amazon is placing the largest bet so far that this is the future of food, which, as ardent supporters of the movement, should be a great thing. This move will likely accelerate the growth of our industry including the expansion of organic farming.
We work closely with Amazon and Whole Foods – both have been outstanding partners and advocates of Foodstirs – and we expect an even better partnership following their combination. We expect significant benefits for consumers via expanded distribution, speed of delivery, lower prices and greater accessibility of organic products (which is part of our core mission). We hope Amazon/Whole Foods will continue working collaboratively with organic and free-from food brands like ours to ensure we can grow profitably in their expanded distribution footprint.
We don’t expect any significant changes from the merger, but we will prepare our operations to enhance how we supply Amazon/Whole Foods from rapid response to supporting the broader set of distribution nodes directly.
We look forward to working with Amazon/Whole Foods to define the next chapter of our industry.
JOHN ROULAC, CEO AND FOUNDER OF NUTIVA
This is an accumulation of a 20-year, Wall Street-funded, corporate roll-up of the organic and natural industry.
It was Mrs. Gooch’s in Los Angeles, Bread & Circus in New England, and many other very dynamic, regional organic supermarkets across the country that got rolled up into Whole Foods. Whole Foods was able to do this because it had fungible currency (i.e., publicly traded stock) to offer.
The same thing happened with brands, such as Annie’s being purchased by General Mills. Now, we are entering the next phase of the roll-up where Whole Foods is getting purchased by Amazon, the leading technology provider.
Amazon buying Whole Foods may well make the operating environment harder for independent retailers and brands, and the chessboard becomes all that more complex. The environment is becoming hyper-competitive, to the likes that we have not seen before.
One big concern is what will now happen to UNFI (the industry’s largest distributor). Is the contract between Whole Foods and UNFI enforceable, which I believe extends until 2025? I have heard that it is. But if Whole Foods walks, that is about 40% of UNFI’s sales, which would make it much tougher for independent retailers.
For organic brands, the deal will have both upsides and downsides. Consolidation of the industry puts more power into the hands of a pretty strong juggernaut, which combines e-commerce and retail. It will be a very, very formidable competitor.
This deal will also accelerate price pressure and share pressure. Smaller brands can do well on Amazon, but smaller brands have had a hard time getting into Whole Foods lately, as buying has become more centralized. To the extent that e-commerce is a greater percentage of grocery, that is a good thing. The retail shelf is going to be a tougher environment unless brands bring a lot of innovation to the table.
At Nutiva, we are not changing our approach right now. At the end of the day, organic companies need to focus on what they do well, create an excellent product, focus on margins and have a great company culture.
SHERYL O’LOUGHLIN, CEO OF REBBL
This acquisition allows many more consumers to access real, fresh and organic foods, which is a huge benefit for the industry and a win for consumers.
It’s fascinating to experience the tipping point of the fundamental shift in what the retail landscape will become. Millennials are shopping very differently and their demand is leading to e-commerce becoming a powerhouse in the retail industry.
The logistical efficiency that Amazon can bring, along with access to data and sophisticated analytics, will become highly beneficial to Whole Foods, manufacturers that work with Whole Foods, and to shoppers.
For example, fresh e-commerce has just started to emerge, opening up the potential to support brands with refrigerated products like REBBL’s super-herb drinks. We’re excited that this acquisition will catapult that opportunity and allow many more consumers access to REBBL in the ways they want to shop.
Another exciting outcome is the reach that Amazon will achieve in informing and educating consumers about food, ingredient and sourcing choices. At REBBL, we hold ourselves to the highest standards, so getting that information to a broad audience will drive awareness to the critical points that influence our food chain and healthy consumption habits.
DANIEL SULLIVAN, CEO AND FOUNDER OF TEMPLE TURMERIC
This is great news for Whole Foods, and the sky is the limit. Amazon is the perfect parent company, making Whole Foods an even more attractive place to do business.
The deal points towards improved delivery systems, accessibility and efficiency for fresh products, all is which is tremendous news for those of us who are refrigerated brands.
Success in today’s dynamic retail landscape is directly tied to the consumer online experience and innovative content. Purchasing patterns are changing rapidly. I believe the Whole Foods acquisition will motivate organic food/beverage brands to restructure trade spend and promotional activity, and adopt digital strategies and reallocate away from traditional brick and mortar ad spend.
With the Whole Foods deal, Amazon is set to dominate online food/beverage and influence a transformation of the entire retail landscape in the years to come.
DAVID BYRNES, CEO AND CO-FOUNDER OF GOOD BOY ORGANICS
I like this acquisition, and I believe that Amazon could help Whole Foods turn a management corner that they seem to have struggled with for quite some time. For young brands, Whole Foods has always been important and always will be, regardless of ownership.
This acquisition won’t change the way that we approach our business, and it is better that Amazon purchased Whole Foods, instead of Walmart or Kroger.
DR. SANDRA CARTER, CEO OF OM, ORGANIC MUSHROOM NUTRITION
I believe this acquisition will have a positive impact on Whole Foods and their ability to compete in the natural product marketplace, which now includes Walmart and Target. Whole Foods has invested in making their stores so appealing, but they have increasing competition from a price perspective now with mass grocery and online options.
My concern about this deal would be their potential ability to dominate and have terms of business that could be overwhelming, particularly for start-up companies. Much of the natural product world has been built on the shoulders of small companies with innovative, healthy products that were often created in a home kitchen or by a few people who have risked their life savings to bring their products to market.
If the “price of admission” to get products to market, in terms of discounts and mandatory marketing buy-ins, becomes unattainable, smaller businesses will be forced very early on to take in capital, and the influence of the initial founders will become diluted by industry giants. This is something we are already seeing with many mainstream major brands investing relatively small amounts in start-ups but commanding high percentages of stock value.
In terms of how this acquisition will change the way we are approaching our business, I would say that focusing on margins will become increasingly important. We will need some more time to understand the full impact of this merger to the infrastructure of distribution and pricing.
Let’s hope that this move helps not only Whole Foods, but all of the small and medium-sized stores who have educated, passionate people who work the aisles of their stores because they believe in the importance of “food as medicine”.
MATT MCLEAN, CEO AND FOUNDER OF UNCLE MATT’S
I think this deal can be a good thing if Amazon does not change the mission and core values of Whole Foods. Many people shop at Whole Foods because they trust their values and high standards for food quality.
Amazon has superior technology and leads the way for online retailers, especially with millennials. Whole Foods is the leader in organic and natural foods. If you combine their strengths, it could be mutually beneficial for both parties and end-consumers.
Like with most retailer consolidations, we would be concerned about how they transition to the new company after the purchase. Do you have new buyers that you don’t know? Do you have a new preferred distributor that has different policies than your existing distributor? And last, will they honor your current deals or promotions that you have in place?
Amazon has been the sleeping giant in grocery retail, especially when it comes to perishable items. Everyone knows they can do dry goods very well.
It will be interesting to see how they use their expertise from online retailing and how that translates to brick and mortar stores.
(The answers above have been edited to fit the format.)
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