Whole Foods CEO John Mackey will remain his position, and the deal is expected to close in the second half of this year.
E-commerce consultant Mark Walker told this site: “It was clear that for Amazon to break into the fragmented grocery market in the US, then they would need to make a bold move."
Walker previously said traditional brick-and-mortar stores still have an opportunity to compete with Amazon because they are better at fulfillment of impulse purchasing and data sharing.
He said today the impact or benefit to the sweets and snacks category from Amazon's Whole Foods acquisition will mainly depend "whether Amazon will look to keep the two businesses separate, or if they look to integrate the models in some way".
Mutual benefits
Amazon will particularly gain shopper insights on the “immediate, smaller and single serve purchase needs, which physical stores serve well for customers versus online,” Walker said.
“Amazon already has an affinity towards supplying foods with strong provenance, organic benefits, or very specific health needs,” he added.
In return, “Whole Foods impulse brands and private label range could easily be introduced onto the website. This means that sweet and snack suppliers of Whole Foods could suddenly have an opportunity for huge customer reach and sales as a result,” Walker said.
“My recommendation is for these suppliers to quickly assess their online capabilities, especially in terms of product discoverability, availability and order fulfilment."
What does the industry have to say?
“PUR is very excited about the acquisition by Amazon of Whole Foods and believes, as an industry leading distributor in the better-for-you gum market, the acquisition will have a very positive affect on the premium gum industry,” PUR’s founder and CEO, Jay Klein, said.
“Amazon recognizes that the health food industry has made a significant impact on how we live our daily lives and on people's desire to be and eat healthy. Amazon recognizes that this trend will continue to grow and be a mainstay in how people protect their health,” he said.
“PUR is also excited about the prospect of broader distribution opportunities. PUR presently works with a team of representatives at Whole Foods who are very knowledgeable and familiar with the premium gum and candy industry, as part of the Whole Foods distribution network and we look forward to our continued relationship with them and the people at Amazon.”
“Amazon and Whole Foods working together will give Whole Foods richer data and insight, opening opportunities for unique innovation, new ways to market to consumers and better insights when building brands. I believe Whole Foods will continue their mission of offering the better-for-you food categories,” CEO and co-founder of Halen Brands, Jason Cohen, said.
The co-founder of organic candy brand, Torie & Howard, Torie Burke said, “It's exciting that a progressive company like Amazon has moved into the natural and organic space. Our organic candy has been in Whole Foods nationally since 2012 and it is online at Amazon.com. We're anticipating this will be an opportunity for growth for Torie & Howard, and we're happy to see it."
Dynamics of confectionery and snacks will be speeding up
From a product innovation perspective, innovative insights director at GlobalData Tom Vierhile believes sweets and snacks are more traditional and slower to change compared to other CPG categories.
“Nostalgia is certainly a big appeal to these [confectionery] products, but a move like this (Amazon acquiring Whole Foods) is a shock to the system because they bring with them a prospect of rapid change that this industry, to some degree, is uncomfortable with,” he said.
“The comfort zone is diminishing for the sweets and snacks industry, and the pace of change will be speeding up if this deal is of any indication,” Vierhile added.
Whole Foods could be cashier-free like Amazon Go
Prior to acquiring Whole Foods, Amazon attempted to open its cashier-free retailer Amazon Go, though the opening was delayed due to technological glitches.
Amazon Go is a gran & go, checkout-free brick and mortar store that features a tracking system charges charging customers for items taken out of the store.
“Retail presence is very important for e-commerce websites like Amazon,” Elspeth Cheung, global BrandZ valuation director at Kantar Millward Brown, told ConfectioneryNews. “But that retail presence has to be in line with your overall strategy.”
“In terms of building a proper physical store, Whole Foods is a great partner to establish an emotion connection with its consumers, which online retailers lack at the moment,” she said.
Cheung said Amazon Go is likely to influence Whole Foods' future store design.
“Automation is the direction for Amazon… Now you don’t even need to click [to buy things online], but just ask ‘Alexa, can I have some beach toys for my vacation next week’?”