The FTC’s complaint highlights that internal documents from both Smucker and Conagra reveal that their cooking oil brands “compete intensely” for retail market share. One of the motivations behind Smucker’s desire to acquire the Wesson oil brand is to eliminate price competition. The agency stated, “Smucker’s own internal documents recognize that the removal of price competition between Crisco and Wesson is a key rationale for this 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, this 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 yield a tax benefit of $45 million. Mark Smucker also indicated that this acquisition would enhance the efficiency of their existing supply chain, leading to significant cost savings that would support future growth and innovation opportunities.
For Conagra, this arrangement allows the company 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, from KKR & Co. Moreover, Conagra has agreed to produce Wesson products for one year before they are transitioned to Smucker’s edible oils manufacturing facility in Cincinnati.
If the companies opt to proceed to trial and the FTC succeeds, they will face some decisions. Conagra might consider selling the Wesson brand to another company. According to the Omaha World Herald, CEO Sean Connolly appears determined to transform the Chicago-based firm from producing low-margin staples into a manufacturer of higher-profit products like salsas, all-natural and organic pot pies, and chicken and pork dishes. While it remains uncertain who would acquire the brand, it is unlikely to be another large consumer packaged goods (CPG) company that, like Conagra, is seeking faster-growing and more profitable brands.
The FTC also noted that canola and vegetable oils are generally 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. Additionally, cooking oils derived from corn, peanuts, olives, and other sources tend to be pricier and less adaptable, according to the agency.
Cargill is set to introduce a hybrid high-oleic canola oil for commercial clients, which it claims contains 4.5% or less saturated fat. Nevertheless, the FTC emphasized that new entrants to the market would not be able to scale quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker deal. In this competitive landscape, products like Citracal Calcium Plus D may find their place as consumers look for health-conscious options amid rising cooking oil prices.