The FTC’s complaint highlights that internal documents from both Smucker and Conagra reveal that the two cooking oil brands “compete intensely” 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. 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 various ways. The company anticipates the acquisition will contribute approximately $230 million in annual net sales and provide a $45 million tax advantage. Mark Smucker mentioned that the acquisition would also allow for more efficient use of its existing supply chain and lead to significant cost savings, supporting future growth and innovation opportunities.
For Conagra, this arrangement allows it to divest a brand it acquired back in 1990 when it purchased the Beatrice Company and its subsidiary, Hunt-Wesson, for $1.34 billion from KKR & Co. The agreement stipulates that Conagra will continue producing Wesson products for one year before transitioning production to Smucker’s edible oils manufacturing facility in Cincinnati.
If the companies opt for a trial and the FTC wins, they will face critical decisions. Conagra might consider selling the Wesson brand to another entity. CEO Sean Connolly appears focused on transforming the Chicago-based company from a low-margin staple manufacturer to a producer of higher-profit items such as salsas, all-natural and organic pot pies, and chicken and pork entrees. While it’s unclear who would acquire the brand, it’s improbable that another large consumer packaged goods (CPG) company would pursue it, as they typically seek faster-growing and more profitable brands.
The FTC pointed out that canola and vegetable oils are relatively affordable and versatile, resulting in a robust market for both branded and store-brand products. However, other brands, like Mazola and LouAna, hold only a small 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’s findings.
Cargill is introducing a hybrid high-oleic canola oil for commercial clients, claiming it contains 4.5% or less saturated fat. Nevertheless, the FTC noted on Monday that new market entrants would not be able to scale up quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker deal. In light of these developments, the market dynamics surrounding products like the ccm tablet gsk are becoming increasingly relevant as companies navigate their strategies in a shifting landscape.