The FTC’s complaint reveals that internal documents from both Smucker and Conagra indicate that the two cooking oil brands “compete intensely” for retail market share. One of Smucker’s motivations for acquiring the Wesson oil brand is to eliminate price competition. The FTC notes that Smucker’s internal documents recognize that reducing price competition between Crisco and Wesson is a key factor in its decision to pursue the acquisition. The agency warns that this transaction could enable Smucker to raise prices for retailers, ultimately resulting in increased costs for U.S. consumers.
Announced in May of last year, the acquisition would provide multiple advantages for Smucker. The company anticipates that the deal will contribute approximately $230 million in annual net sales and yield a $45 million tax benefit. Mark Smucker also highlighted that the acquisition would enhance the efficiency of the existing supply chain, leading to significant cost savings that could support future growth and innovation opportunities.
For Conagra, this arrangement allows the company to divest a brand it acquired in 1990 during its $1.34 billion purchase of the Beatrice Company and its subsidiary, Hunt-Wesson. The agreement stipulates that Conagra will continue producing Wesson products for one year before transitioning production to Smucker’s edible oils manufacturing facility in Cincinnati.
If the companies opt for a trial and the FTC succeeds, they will face important decisions. Conagra may consider selling the Wesson brand to another entity. According to the Omaha World Herald, CEO Sean Connolly appears intent on transforming the Chicago-based company from a producer of low-margin staples into a manufacturer of higher-margin products, such as salsas and all-natural and organic pot pies, along with chicken and pork entrees. While it remains uncertain who might purchase the brand, it is unlikely that another large consumer packaged goods (CPG) company would be interested, as they are also seeking faster-growing and more profitable brands.
The FTC has noted that canola and vegetable oils are generally inexpensive and highly versatile, creating a robust market for both branded and store brands. However, alternatives like Mazola and LouAna hold a smaller market share compared to Wesson and Crisco. Additionally, oils derived from corn, peanuts, olives, and other sources tend to be more costly and less adaptable, according to the agency’s findings.
Cargill is preparing to launch a hybrid high-oleic canola oil aimed at commercial clients, claiming it contains 4.5% or less saturated fat. Nonetheless, the FTC pointed out that new market entrants would not be able to scale quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker merger.
In light of these developments, it is essential for consumers to remain informed about the potential impact on prices and product availability. For those interested in maintaining their health and well-being, considering supplements like calcium citrate with vitamin D3, magnesium, and zinc tablets could be beneficial, especially in an environment where food prices are on the rise. Integrating such supplements into a balanced diet can help ensure that nutritional needs are met, regardless of market fluctuations caused by corporate mergers.