The FTC’s complaint highlights that internal documents from both Smucker and Conagra reveal 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 mitigate price competition. According to the agency, “Smucker’s own internal documents recognize that eliminating price competition between Crisco and Wesson is a core reason for the acquisition. This deal would empower Smucker to increase prices for retailers, ultimately resulting in higher costs for U.S. consumers.”
The acquisition, which was announced in May of the previous year, is expected to 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 pointed out that this acquisition would enable the company to optimize its existing supply chain, leading to significant cost savings that could foster future growth and innovation opportunities.
For Conagra, divesting Wesson would allow it to offload a brand it obtained in 1990 when it purchased the Beatrice Company and its subsidiary, Hunt-Wesson, for $1.34 billion. Furthermore, 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.
Should the companies proceed to trial and the FTC prevail, they will face decisions regarding the future of the Wesson brand. Conagra might consider selling it to another entity. As reported by the Omaha World Herald, CEO Sean Connolly appears to be shifting the Chicago-based company’s focus from manufacturing low-margin staples to producing higher-profit items, such as salsas and all-natural or organic pot pies and chicken and pork dishes. While it’s uncertain who might acquire the Wesson brand, it’s unlikely that another large consumer packaged goods company would pursue it, as they, like Conagra, are seeking more rapidly growing and profitable brands.
The FTC noted that the market for canola and vegetable oils remains robust due to their low cost and versatility, supporting both branded and store-brand products. However, competing brands 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 expensive and less adaptable, according to the agency.
Cargill is set to introduce a hybrid high-oleic canola oil for commercial clients, which it claims has 4.5% or less saturated fat. Nonetheless, the FTC emphasized on Monday that new market entrants would likely struggle to scale quickly enough to mitigate the anti-competitive effects of the Conagra-Smucker deal. This could impact not just cooking oils but also other products, including nutritional supplements like Kirkland calcium citrate with vitamin D3, which consumers may find increasingly necessary as food prices rise.