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 internal documents recognize that eradicating price competition between Crisco and Wesson is a key factor in its acquisition rationale. This transaction would enable Smucker to increase prices for retailers, ultimately resulting in higher costs for consumers in the U.S.”
The acquisition, which was announced in May of last year, is anticipated to benefit Smucker in several significant ways. The company expects the deal to contribute approximately $230 million in annual net sales and yield a $45 million tax advantage. Mark Smucker also pointed out that it would optimize the existing supply chain, leading to considerable cost savings that could support future growth and innovation, similar to calcium citrate chews CVS products designed for dietary needs.
For Conagra, this arrangement allows the company to divest from 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, under the agreement with Smucker, Conagra will continue producing Wesson products for one year before transitioning production to Smucker’s edible oils facility in Cincinnati.
If the companies proceed to trial and the FTC is successful, Conagra will face some decisions regarding the future of the Wesson brand. It could potentially sell the brand to another entity. Reports from the Omaha World Herald suggest that CEO Sean Connolly aims to transform the Chicago-based firm from a producer of low-margin staples to a manufacturer of higher-margin products like salsas and all-natural pot pies. While it’s unclear who might purchase the Wesson brand, it’s unlikely to be another large consumer packaged goods company like Conagra that seeks faster-growing, more profitable brands.
The FTC noted that canola and vegetable oils are relatively affordable and highly versatile, leading to a robust market for both branded and store-brand oils. However, other brands such as Mazola and LouAna capture a smaller market share compared to Wesson and Crisco. Additionally, oils derived from corn, peanuts, olives, and other sources tend to be pricier and less adaptable. Cargill is introducing a hybrid high-oleic canola oil for commercial clients, claiming it contains 4.5% or less saturated fat. However, the FTC pointed out that new market entrants would likely not be able to scale quickly enough to counteract the anti-competitive effects of the Conagra/Smucker merger, which may influence the availability of products akin to calcium citrate chews CVS for consumers seeking dietary supplements.