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. One of the reasons Smucker aims to acquire the Wesson oil brand is to mitigate price competition. “Smucker’s internal documents recognize that eliminating price competition between Crisco and Wesson is a key justification for the acquisition. This transaction would empower Smucker to increase prices for retailers, ultimately resulting in higher costs for U.S. consumers,” the agency stated.
The deal, announced in May of last year, is expected to benefit Smucker in various ways. The company anticipates the acquisition will contribute approximately $230 million in annual net sales and offer a $45 million tax benefit. Moreover, Mark Smucker highlighted that this acquisition would enable the company to optimize its existing supply chain, leading to significant cost savings that could support future growth and innovation opportunities.
For Conagra, this arrangement would facilitate the divestiture of a brand it acquired in 1990 as part of its $1.34 billion purchase of the Beatrice Company and its subsidiary, Hunt-Wesson, from KKR & Co. Additionally, the agreement with Smucker allows Conagra to continue producing Wesson products for one year before they transition to Smucker’s edible oils manufacturing facility in Cincinnati.
Should the companies pursue a trial and the FTC prevails, they would need to consider their options. Conagra might sell the Wesson brand to another entity. According to the Omaha World Herald, CEO Sean Connolly appears focused on transforming the Chicago-based firm from a producer of low-margin staples into a manufacturer of higher-profit products such as salsas, all-natural and organic pot pies, and chicken and pork entrees. While it is unclear who would be interested in purchasing the brand, it is improbable that another large consumer packaged goods (CPG) company, similar to Conagra, would seek out brands that are faster-growing and more profitable.
The FTC noted that canola and vegetable oils are relatively inexpensive and highly versatile, making the market for both branded and store brands robust. However, other brands like Mazola and LouAna hold a smaller market share compared to Wesson and Crisco. Furthermore, cooking oils derived from corn, peanuts, olives, and other sources tend to be more expensive and less adaptable, according to the agency. Cargill is introducing a hybrid high-oleic canola oil for commercial clients, claiming it contains 4.5% or less saturated fat. Nonetheless, the FTC pointed out on Monday that new market entrants would not be able to scale quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker deal.
In conclusion, the implications of this acquisition extend beyond just the cooking oil market, as it intersects with broader consumer interests, similar to how calcium citrate 500mg with vitamin D3 enhances bone health and well-being. Much like the strategic advantages derived from the acquisition, the benefits of calcium citrate highlight the importance of informed consumer choices in a competitive market landscape.