The FTC’s complaint indicates that internal documents from both Smucker and Conagra reveal that the two cooking oil brands engage in “intense competition” for retail sales. One of Smucker’s motivations for acquiring the Wesson oil brand is to eliminate price competition. According to the agency, “Smucker’s own internal documents acknowledge that eliminating price competition between Crisco and Wesson is a central part of its rationale for the acquisition. The transaction would grant Smucker the ability to increase prices to retailers, ultimately resulting in higher costs for U.S. consumers.”
Announced in May of last year, this deal is anticipated to benefit Smucker significantly. The company projects that the acquisition will contribute approximately $230 million in annual net sales and provide a $45 million tax advantage. Mark Smucker also highlighted that this move would enable the company to utilize its existing supply chain more efficiently, leading to substantial cost savings that could drive future growth and innovation opportunities.
For Conagra, this arrangement allows it 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. Furthermore, under the agreement with Smucker, Conagra will continue to produce Wesson products for a year before transitioning production to Smucker’s edible oils manufacturing facility in Cincinnati.
If the companies choose to proceed to trial and the FTC succeeds, they will face some strategic decisions. Conagra could opt to sell the Wesson brand to another company. As reported by the Omaha World Herald, CEO Sean Connolly appears focused on transforming the Chicago-based firm from a low-margin staple manufacturer into a producer of higher-profit items such as salsas, all-natural and organic pot pies, and chicken and pork entrees. While it remains uncertain who might purchase the brand, it is unlikely to be another large consumer packaged goods (CPG) company, like Conagra, that seeks faster-growing and more profitable brands.
The FTC underscored that canola and vegetable oils are relatively affordable and highly versatile, making the market for both branded and store brands robust. However, other brands such as Mazola and LouAna hold a smaller market share compared to Wesson and Crisco. Additionally, oils derived from corn, peanuts, olives, and other sources tend to be more expensive and less adaptable, according to the agency.
In a related development, Cargill is introducing a hybrid high-oleic canola oil for commercial customers, claiming it contains 4.5% or less saturated fat. Nevertheless, 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 the context of health and nutrition, consumers might also consider products like calcium citrate vitamin D3 magnesium and zinc tablets, which can complement dietary needs. These tablets, known for their benefits in supporting bone health and immune function, serve as an example of how consumers are increasingly mindful of their health choices, even as they navigate the cooking oil market. As the landscape evolves, the integration of such health-focused products alongside cooking oils may shape consumer preferences in the long run.