The proposed acquisition of Whole Foods Market by Amazon has some retailers and food manufacturers weighing the pros and cons of the combination. One company clearly in the “pro” category is the Hain Celestial Group.
|Irwin Simon, chairman, president and c.e.o. of the Hain Celestial Group|
“We are one of Whole Foods’ largest suppliers of natural organic products across many categories,” said Irwin D. Simon, chairman, president and chief executive officer of the Hain Celestial Group, during a June 22 conference call with securities analysts to discuss the company’s latest earnings. “Amazon is one of our fastest-growing customers. We expect the combination to be very positive for Hain Celestial as we sell more products through brick-and-mortar and e-commerce. We have taken the important steps to increase and build availability of our brands across all sales channels around the world. I have never been more excited about the prospects for Hain Celestial.”
Gary W. Tickle, c.e.o. of Hain Celestial North America, said what makes Amazon successful is consumer convenience and product accessibility combined with pricing and data-driven customization, and he predicted such a business model will be applied to Whole Foods Market.
|Gary Tickle, c.e.o. of Hain Celestial North America|
“This presents us with a real opportunity to increase availability and household penetration for our range and to further expand the growth of natural and organic offerings to the conventional shopping space,” he said.
But one analyst on the conference call pointed out that a 30-oz package of Hain Celestial’s Jason’s branded personal care product retailed for $10.99 on Amazon, $14.99 at Whole Foods and $11.99 at another retailer. The analysts asked how the merger may affect the discrepancy in price.
“… I’d rather be selling a lower-margin product with 5% growth than a higher-margin product with negative growth, okay?” Mr. Simon said. “It’s not a race to the bottom, it’s a race to the top. So, I think that’s what we’re looking at, the big-time growth opportunity for us on the combination of (Amazon and Whole Foods.) And along with that, there’s plenty of efficiencies to take out of — continuously take out of the business.”
Another analyst questioned whether Amazon would emphasize its 365 and Whole Foods store brands over other branded products, but Mr. Simon pointed out that the barrier to entry into the market for organic foods is difficult from a manufacturing standpoint.“… That is why spending money on our brands and being price competitive — a consumer is going to buy a brand over private label if you’re price competitive — and there’s something unique about the brand,” Mr. Simon said. “What (the) Amazon and Whole Foods combination will do is drive more and more awareness to natural (and) organic products. And that’s where the big opportunity for us is to pick up a big piece of that conventional market that wants to convert to natural, organic.”