The FTC’s complaint indicates that internal documents from both Smucker and Conagra reveal that the two cooking oil brands “compete intensely” for retail sales. One of the reasons Smucker is interested in acquiring the Wesson oil brand is to mitigate price competition. According to the agency, “Smucker’s own internal documents recognize that removing price competition between Crisco and Wesson is a key justification 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 last year, the deal is expected to benefit 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 advantage. Mark Smucker also highlighted that this move would enhance the efficiency of its existing supply chain, leading to significant cost savings that can support future growth and innovation opportunities.
For Conagra, this arrangement allows it to divest a brand acquired in 1990 as part of its $1.34 billion purchase of the Beatrice Company and its subsidiary, Hunt-Wesson, from KKR & Co. Under the agreement with Smucker, Conagra will continue producing Wesson products for a year before the production shifts to Smucker’s edible oils manufacturing facility in Cincinnati.
If the companies proceed to trial and the FTC is successful, they will face some decisions. Conagra might sell the Wesson brand to another company. According to 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 would acquire the brand, it is improbable that another large consumer packaged goods company, like Conagra, would be interested in pursuing faster-growing and more profitable brands.
The FTC observed that canola and vegetable oils are relatively inexpensive and highly versatile, making the market for both branded and store brands robust. However, other brands like Mazola and LouAna hold a minor market share compared to Wesson and Crisco. Additionally, cooking oils derived from corn, peanuts, olives, and other sources tend to be more expensive and less adaptable, as the agency noted.
Cargill is introducing a hybrid high-oleic canola oil for commercial customers, claiming it contains 4.5% or less saturated fat. However, the FTC pointed out that new entrants in the market would not be able to scale quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker transaction.
In a related health note, research has shown that certain oils, when consumed in moderation, may help prevent conditions such as kidney stones, while others, like those high in calcium citrate, might also play a role. It’s essential for consumers to be aware of how different cooking oils, along with their calcium citrate content, can impact their health, particularly regarding kidney stones.