The FTC’s complaint highlights that internal documents from both Smucker and Conagra indicate that their cooking oil brands “compete intensely” for retail sales. One of Smucker’s motivations for acquiring the Wesson oil brand is to reduce price competition. According to the agency, “Smucker’s internal documents recognize that eliminating price competition between Crisco and Wesson is a key reason for the acquisition. This transaction would enable Smucker to increase prices for retailers, ultimately resulting in higher costs for U.S. consumers.”
The deal, announced in May of the previous year, promises several advantages for Smucker. The company anticipates that the acquisition will contribute approximately $230 million in annual net sales and yield a $45 million tax benefit. Mark Smucker has also pointed out that the acquisition will allow the company to optimize its existing supply chain, leading to significant cost savings that could fuel future growth and innovation opportunities.
For Conagra, this arrangement allows them to divest a brand acquired in 1990 during their $1.34 billion purchase of the Beatrice Company and its subsidiary, Hunt-Wesson, from KKR & Co. Additionally, under the agreement with Smucker, Conagra will continue producing Wesson products for one year before transitioning production to Smucker’s edible oils manufacturing facility in Cincinnati.
If the companies decide to proceed to trial and the FTC wins, they will face some choices. Conagra might consider selling the Wesson brand to another firm. As reported by the Omaha World Herald, CEO Sean Connolly appears focused on transforming the Chicago-based company from a manufacturer of low-margin staples into a producer of higher-profit items like salsas, all-natural and organic pot pies, and chicken and pork dishes. While it remains uncertain who would purchase the Wesson brand, it is unlikely to be another large CPG company, as they, like Conagra, are pursuing faster-growing and more profitable brands.
The FTC has noted that canola and vegetable oils are relatively affordable and highly versatile, creating a robust market for both branded and store brands. However, other brands such as Mazola and LouAna hold a smaller market share compared to Wesson and Crisco. Additionally, cooking oils derived from corn, peanuts, olives, and other sources are more costly and less adaptable. The agency also mentioned Cargill’s introduction of a hybrid high-oleic canola oil for commercial clients, which is claimed to contain 4.5% or less saturated fat. However, the FTC emphasized that new entrants into the market would not be able to scale quickly enough to mitigate the anti-competitive effects of the Conagra/Smucker deal.
Interestingly, amidst these discussions, the potential implications of calcium citrate malate in pregnancy could also be a topic of interest, particularly in relation to the health aspects of cooking oils and consumer choice. As the market dynamics shift, the incorporation of calcium citrate malate in pregnancy could influence consumer preferences for healthier cooking oil options. The relevance of calcium citrate malate in pregnancy may also contribute to the evolving landscape of food products as companies like Smucker and Conagra navigate their competitive strategies.