Amazon announced plans to acquire Whole Foods for $13.7 billion, that is no chump change so you can be sure that Amazon is aware of the importance many consumers put in the organic and healthier grocery choices this business is famous for offering. While this is a big and big-money move that shocked many, many people are starting to ask what this means for Whole Foods going forward. Is this a good thing? A bad thing? Or both? What does it mean for the future of food — and the future of natural and organic foods, in particular? These are all important questions, questions I want to take a look at but first, I think we should take a quick step back.
Recently, Whole Foods has been under enormous pressure from investors to merge with another company, though very few expected it would be Amazon. Amazon is an enormous company that’s come to be known as “the everything store.” But even though the company has been trying to muscle its way into the grocery and produce business, it hasn’t been able to master online groceries the way it’s mastered other areas, such as books and electronics. Now, however, as the owner of Whole Foods, the company could be poised to dominate the online grocery business — which it sees as a major emerging opportunity.
Fair enough, but how will this change Whole Foods? I mean, surely there will be some changes, Whole Foods has long been controversial among natural foods consumers. On the one hand, the company has pioneered taking fresh, organic, fair trade and sustainable foods into the mainstream. While on the other hand, it has driven many independently owned natural foods stores out of business, and advanced consolidation and corporate takeover of the natural foods industry. Now, Whole Foods may soon be controlled by Amazon, a company that is known for being efficient and standardized, but that has a poor environmental record and questionable labor practices. Amazon is known for selling things faster and cheaper. And for selling just about everything, without regard to its impact on health, workers, or the environment. So undoubtedly, changes are coming for Whole Foods stores. But exactly what changes will occur, and how much things will actually change remains to be seen.
Will the Amazon-Whole Foods merger change how people will shop for food in the future? Right now, most people go to a physical place to shop for groceries. But in the future, you may be doing all your shopping online; without ever leaving your home. The fact is that many local grocery stores allow you to do that even now. And if you do shop in a store, the experience will likely be very different, and more focused on technological innovations.
A report from the Food Marketing Institute and Nielsen found that only around a quarter of U.S. households currently shop online for groceries, but predicts that more than 70% will do so within 10 years. In particular, millennials are the largest group of consumers using online grocery shopping. So, for better or for worse, it seems that online shopping really could be a part of the future of grocery shopping, and by purchasing Whole Foods, Amazon could be setting itself up to shape and perhaps even define this new direction. On the whole, it seems that there are some forward looking decision makers at Amazon, but this has pretty much always been the case.
It could help healthy and organic foods become more accessible and more affordable -
- This move could speed up the growth of organic food and expand organic farming. As Jeff Church, CEO and founder of the organic company Suja Juice said, this acquisition proves “that organic is the future!”
And organic analyst Max Goldberg said, “With [Jeff Bezos’] purchase of Whole Foods, he has made it very clear that organic, Non-GMO and healthy food is the future, something that is indisputable.”
- The demand for organic is rising globally. The global food and drink market is expected to reach $320.5 billion by 2025. And organic spending is rising in the US too. According to the Organic Trade Organization, Americans spent 8% more in 2016 on organic foods than they did the previous year and that number is expected to continue to go up.
- Amazon would be able to use the 460 Whole Foods stores in the U.S., Canada, and the UK to bring the accessibility of its organic and plant-powered foods to unprecedented levels.
- Sheryl O’Loughlin, CEO of Rebbl, said, “This acquisition [would allow] many more consumers to access real, fresh and organic foods, which is a huge benefit for the industry and a win for consumers.”
- People who live in food deserts without access to fresh, healthy food could now have greater access to good food on account of expanded online sales.
- According to a report by Bloomberg, Amazon wants to shed Whole Foods “whole paycheck” image and to make natural, organic food more competitive with larger retailers, like Walmart.
- In order to be competitive, grocery stores are going to need to offer more organic food.
- “If anything, broader availability of foods with Whole Foods’ very high standards should raise the bar for the entire market and retailers everywhere, in order to compete,” John Foraker, president or organic food company Annie’s, said, when asked about the merger. “That will be good for farmers, ranchers, and the sustainability of our food supply.”
But for those of you who prefer to take a ‘glass half empty’ look at the potential new player on the organic food scene, here are some challenges this merger could bring.
It could be too much power for one corporation to hold-
- The grocery industry is already dominated by a handful of big retailers. This merger would further that direction.
- John Roulac, CEO and founder of Nutiva, said, “This is an accumulation of a 20-year, Wall Street-funded, corporate roll-up of the organic and natural industry.”
- As he points out, the environment could become hyper-competitive, and independent retailers and brands would have even more difficulty being successful. There are even some observers and members of Congress who think the merger may violate antitrust laws. How all of that plays out is still to be seen.
- As pressure is put on the industry to lower the price of organic foods, organic standards may suffer. And in turn, small family farmers could be impacted as well.
- As major grocers go, Whole Foods is known for its commitment to quality standards. But Amazon is known for selling anything, quickly and for the lowest price. While those two corporate profiles do not necessarily mutually exclude each other, they do not easily go hand in hand either.
- Gunnar Lovelace, CEO of Thrive Market, which offers organic and natural products at discounted prices, believes that many consumers are concerned about this merger. He told said: “I’ve looked extensively at consumer responses to the Amazon acquisition of Wholefoods and there is a lot of concern about Amazon getting too big and of not being a trustworthy source of groceries which validates our investment in an authentic brand, clean-transparent supply chains, genuine community and advocacy work as a business.”
- Whole Foods CEO John Mackey has said that quality standards at Whole Foods would remain the same after the merger. But whether or not this is true remains to be seen and is likely to soon be out of his control anyway.
- Some people fear that this merger will lead to fewer jobs. Amazon is knowing for using automation instead of people, and could bring this mentality to Whole Foods stores.
- “Amazon’s brutal vision for retail is one where automation replaces good jobs,” Marc Perrone, the president of the United Food and Commercial Workers union, told Buzzfeed. “That is the reality today at Amazon, and it will no doubt become the reality at Whole Foods.”
- Though organic farming will likely grow, farmers could suffer as the demand for lower cost organic foods rises quickly. Many small-scale organic growers could lose their farms as quality and principle are compromised for quantity and lower prices – at any cost.
The bottom line is simply this, more people are demanding food that is good for people and for the planet, and this merger could help grow and sustain this trend. Organic, plant-powered food could become more accessible and more affordable for everyone. That is one side of the coin, but on the other side it is just as likely that quality will be diluted, and that the standards for how food is grown, processed, prepared, packaged and even delivered may go down. This could put more pressure than ever on consumers to make wise and conscious choices.
Where you shop matters. Supporting establishments that have ethical integrity and moral fiber, and that are more interested in health than just in profits, is one of the ways that you can invest in your wellness, in your community, and in our common future. Farmer’s markets and community supported agriculture (CSA) programs are a great way to support local organic farmers and to invest in your health at the same time. So are independent, locally owned natural foods stores and coops. And if you want to save 30% or more off typical Whole Foods market prices, while having 100% non-GMO foods delivered to your door, Thrive Market or other similar online sites could be another outstanding option.
In the end, (as I have said many time on this blog and in my books) every purchase you or I make is a vote. So, it’s up to each of us to use our dollars to vote for the health and the future we want and deserve.