This surprise transaction symbolizes Amazon’s desire to redesign the landscape of the American food industry, dominated by Wal-Mart, Costco, Target and Kroger.
“Millions of people love Whole Foods Market because they offer the best natural and organic food and they make healthy eating something entertaining,” commented Amazon boss Jeff Bezos.
Created in 1980 on fair trade and healthy eating, Whole Foods is present in three countries (United States, Canada, United Kingdom) with more than 430 stores, but has suffered for two years from consumers.
The bio business was facing pressure from some of its shareholders, notably the activist fund Jana Partners, who were asking it to accelerate its restructuring or even consider a sell-off, faced with increased competition from other cheaper supermarkets.
The takeover “offers the opportunity to maximize our value to the shareholders of Whole Foods Market, while deepening our mission,” commented John Mackey, the boss and co-founder.
After the deal, which is scheduled for completion in the second half of the year, Whole Foods will retain its name and headquarters in Austin, Texas, and Mr. Mackey will remain its boss.
With this acquisition, Amazon is going to upset the food distribution landscape and further expands its empire, after launching into series production, food delivery, cloud computing and drones.
“Whole Foods gives Amazon the opportunity to be a major player in the food industry without having to build a physical network from scratch,” says Neil Saunders, an expert at Global Data Wholes Foods, is the biggest acquisition ever made By the group of Jeff Bezos, who had spent $ 1.2 billion in 2009 to get Zappos.com and $ 1 billion in 2014 for the Twitch streaming platform.
While physical store management differs from the model set up by Amazon since its inception due to complicated logistics and enormous costs, Amazon has recently begun to build its expansion into the traditional supermarket segment by unveiling different concepts.
He launched Amazonfresh, a fresh food delivery service, recently opened a cashless store in Seattle (northwest) and is testing a store concept where consumers could just pick up their ordered shopping on the internet .
The takeover of Whole Foods “will change everything” for traditional supermarkets, says Gregori Volokhine, expert at Meeschaert Financial Services.
A sentiment widely shared on Wall Street, where most of the shares of the sector plunged. The world number one Wal-Mart distribution plummeted by 6.22%, Target by 10.37%, Costco by 6.84%. The Kroger share, given a time as the future purchaser of Whole Foods, fell by 14.41%.
Amazon will “use Whole Foods as a laboratory to try to completely transform the sector” of food distribution, so far still little invested in online commerce, said Volokhine.
For the traditional actors, “it is absolutely dramatic” because “there will be more competition at the price level”. But “the margins at the level of the food are of 2%, it is extremely weak”, he added.
Neil Saunders adds that they will have to “invest more in technology to improve their physical stores and also on their online platforms to keep pace driven by Amazon.” “It’s a terrifying prospect,” he said.
The food industry is valued at about $ 600 billion in the United States, according to Volokhine.
In order not to lose market share in the face of changes in consumer habits of the Millennials (17-35 years), traditional brands had begun to reinvent themselves by offering more “organic” products and hoping to guard against attacks by Giants of Silicon Valley.