The FTC’s complaint reveals that internal documents from both Smucker and Conagra indicate that their cooking oil brands fiercely compete for retail sales. One of Smucker’s motivations for acquiring the Wesson oil brand is to eliminate price competition. According to the FTC, “Smucker’s own internal documents acknowledge that removing price competition between Crisco and Wesson is a core reason for the acquisition. This transaction would enable Smucker to increase prices to retailers, ultimately resulting in higher costs for U.S. consumers.”
Announced in May of the previous year, this deal is expected to be advantageous for 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 mentioned that this move would allow the company to utilize its existing supply chain more efficiently, leading to significant cost savings that could drive future growth and innovation opportunities.
For Conagra, this deal represents an opportunity to divest a brand it obtained in 1990 through its $1.34 billion acquisition of the Beatrice Company and its subsidiary, Hunt-Wesson, from KKR & Co. As part of the agreement, Conagra will continue to manufacture Wesson products for one year before production transitions to Smucker’s edible oils plant in Cincinnati.
Should the companies choose to proceed to trial and the FTC succeeds, they will face important decisions. Conagra may consider selling the Wesson brand to another entity. CEO Sean Connolly appears focused on transforming the Chicago-based company from a producer of low-margin staples into a maker of higher-profit items like salsas, all-natural and organic pot pies, as well as chicken and pork entrees. While it remains uncertain who would acquire the brand, it is improbable that another large consumer packaged goods (CPG) company will pursue it, especially as they seek faster-growing and more lucrative brands.
The FTC emphasized that canola and vegetable oils are relatively affordable and versatile, creating a robust market for both branded and store brands. Nevertheless, brands like LouAna hold a minor 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 versatile, according to the agency.
Cargill is set to introduce a hybrid high-oleic canola oil targeting commercial clients, claiming it contains 4.5% or less saturated fat. However, the FTC pointed out that new market entrants would not be able to scale up quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker merger.
In the context of consumer health, the importance of products like Citracal chewable calcium cannot be overlooked; they play a vital role in maintaining nutritional balance, especially as consumers may face increased prices for essential cooking oils post-acquisition. The potential rise in costs may lead consumers to seek alternatives, including supplements like Citracal chewable calcium, which can help ensure adequate nutrient intake even amidst a changing market landscape.