Natural foods monopoly?
US natural-foods supermarket chain Whole Foods Market announced it would acquire its biggest rival, Wild Oats Marketplace. The $565 million deal will consolidate the two largest players in the high-end natural/organic food retailing business. Whole Foods has about 180 stores, while Wild Oats has around 110.
Whole Foods has been a major acquirer, with 18 acquisitions over the past few years, including such organic markets as Fresh Fields (at that time the #2 organic chain) and Bread & Circus. The irony is that the enormous growth of the company may give it that corporate juggernaut identity that its customers feel so uncomfortable with. In ones sense, Whole Foods will put an end to competition in its segment, and says it plans to close down stress with overlapping territories. It's an enormously profitable company, which avoids the price competition that has hurt other supermarkets.
In some sense, like the satellite radio industry, this looks like a monopoly grab. But f you step back, and consider the recent organic push of Wal-Mart, Safeway, Krogers, and other major supermarkets, it's a predictable occurrence. If only to assure a source of organic food products when faced with Wal-Mart purchasing juggernaut, Whole Foods only defense is t get a lot bigger.
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