ibusinesslines.com
ibusinesslines.com May 22, 2018


Whole Foods CEO hints at another brand under Amazon

20 June 2017, 11:03 | Kelvin Horton

Turner noted that Whole Foods has large store footprints in most of GrubHub's key geographies, including California, Massachusetts, Illinois and NY.

Now, in the aftermath of the announcement, packaged foods manufacturers and marketers are asking themselves and each other lots of questions, the chief one among them sounding something like: "We know this deal must be big but what does it mean for us?"

Little is known about the outcome of the meetings. The reports of Amazon's massive purchase of the upscale grocery store chain seemed to come out of nowhere, but perhaps the acquisition is not as surprising as originally thought.

The rules for dealing with and doing business with Amazon are going to be rewritten.

What this deal means for food manufacturing is unclear yet.


Even so, Mr. Mackey said at the town hall that, as part of Amazon, other store formats might emerge under a different name that don't necessarily meet the brand's high standards for natural and organic foods. Those that don't might lose. And this might have entered into Amazon's bid for Whole Foods. Recently, 915 Labs, which manufacturers microwave assisted thermal sterilization equipment, announced it created signature dishes, including macaroni and cheese and an egg frittata, to launch in partnership with Amazon and a food company on the Amazon Exclusive platform.

Amazon's Wilke told the employees about his own journey to eating healthier food, and praised the Whole Foods experience.

For example, Bryan Gilderberg, head of research at Kantar Retail, shared some of his research with me on Friday. The company spent over four years planning the cashier-less market and despite a few technical difficulties, an 1,800 square foot prototype is now open to Amazon employees in downtown Seattle. At least that's what Whole Foods believes. "It really is, for all of you 'cause you not only have opportunities to grow at Whole Foods Market".

The sale still needs approval from whole foods shareholders but the deal is expected to be wrapped up later this year. "Additionally, over the past year, Whole Foods has also pushed their private label offering, especially with the roll out of their spin-off store 365 by Whole Foods". For one, the combined Amazon-Whole Foods is a strong private-label player. They put the customer first in everything they do and think backwards. The firm also provides an overview of Amazon's existing grocery product and footprint and outlines a scenario accretion/dilution analysis pointing to a potential 3.1% EPS and 0.6% FCF accretion. The Amazon/WFM transaction, in combination with growth in the hard discounters (Aldi, Lidl) and Walmart's recent price investments should pressure many traditional grocers, driving further consolidation in the space.



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