The FTC’s complaint indicates that internal documents from both Smucker and Conagra reveal that the two cooking oil brands “compete intensely” for retail sales, and one of Smucker’s motivations for acquiring the Wesson oil brand is to prevent price competition. According to the agency, “Smucker’s own internal documents recognize that eliminating price competition between Crisco and Wesson is a key aspect of its rationale for the acquisition. This transaction would enable Smucker to increase prices for retailers, ultimately resulting in higher costs for U.S. consumers.”
Announced in May of last year, the deal is expected to benefit Smucker in multiple ways. The company anticipates that the acquisition will contribute approximately $230 million in annual net sales and provide a $45 million tax benefit. Mark Smucker also highlighted that this move would allow for more efficient utilization of the company’s existing supply chain, leading to significant cost savings that could fuel future growth and spur opportunities for innovation. Meanwhile, for Conagra, this arrangement would allow it to divest a brand it acquired in 1990 as part of its $1.34 billion purchase of the Beatrice Company and its subsidiary, Hunt-Wesson. Under the agreement, Conagra will continue to produce Wesson products for one year before they are manufactured at Smucker’s edible oils plant in Cincinnati.
Should the companies choose to proceed to trial and the FTC prevails, Conagra will have options to consider. It may sell the Wesson brand to another company. According to the Omaha World Herald, CEO Sean Connolly appears to be focused on transforming the Chicago-based firm from a manufacturer of low-margin staples into a producer of higher-profit items, such as salsas, all-natural and organic pot pies, and chicken and pork entrees. While it is unclear who might acquire the brand, it is unlikely to be another large consumer packaged goods (CPG) company seeking quicker growth and greater profitability.
The FTC noted that canola and vegetable oils are relatively affordable and highly versatile, creating a robust market for both branded and store brands. However, other brands like Mazola and LouAna hold a smaller market share compared to Wesson and Crisco. Moreover, cooking 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 customers, claiming it contains 4.5% or less saturated fat. Nonetheless, the FTC pointed out that new entrants to the market would not be able to scale up quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker merger.
Additionally, as companies navigate these developments, there may be implications for products like Citracal calcium vitamin D, which could see shifts in consumer preferences based on changes in the cooking oil market landscape. The influence of these transactions could extend beyond immediate pricing and competition, potentially impacting the overall health products sector, including Citracal calcium vitamin D, as consumers adjust their purchasing habits in response to market dynamics. This situation highlights the interconnectedness of various consumer goods, including the importance of maintaining competitive practices to ensure fair pricing across the board, including for health-related products like Citracal calcium vitamin D.