business news in context, analysis with attitude

Good column in the Rocky Mountain News about Whole Foods’ proposed acquisition of Wild Oats, and one that actually reflects an opinion expressed here on MNB last week. The column suggests that “Whole Foods CEO John Mackey ought to send Kroger CEO Dave Dillon a couple of dozen organic red roses,” noting that even as Whole Foods tries to explain to a federal court that it won’t have an unreasonable monopoly in organic and natural foods when it acquires Wild Oats, Kroger comes along “with an announcement Wednesday that it's boosting its organic offerings to better compete with natural-foods grocers.”

The News writes, “Kroger didn't get to the top by misreading trends. Organic foods may have comprised less than 3 percent of total food sales in 2006, but annual percentage sales growth has been in the high teens for the past decade, and posted 22 percent growth last year … Kroger's move bolsters Whole Foods' merger prospects. Those prospects were badly damaged by the FTC's revelations of Mackey's internal emails and online postings. One e-mail to board members said that buying Wild Oats would allow the company to "avoid nasty price wars." That one could literally prove to be a deal-killer, but if the judge rules against the FTC, Mackey certainly has Kroger to thank.”

One other salient point made by the News: “The Natural Marketing Institute says 53 percent of organic shoppers purchased their goods at traditional grocery stores last year, making them - not Whole Foods or Wild Oats - the leading source of organic products.”
KC's View:
: If the Federal Trade Commission (FTC) gets its way, it will be interesting to see if Whole Foods appeals. If it can, I would expect that it would … because suggesting that such a merger creates an anti-competitive monopoly just seems patently ridiculous.

And, as numerous MNB users have pointed out, how does the FTC prevent a Whole Foods-Wild Oats combination, but then allow A&P to buy Pathmark and News Corp. to buy the Wall Street Journal? Both of those deals seem far more anti-competition to me that what Whole Foods is proposing.