Maddy: Earlier today, Amazon announced its $13.7B acquisition of Whole Foods, and two of Minnesota two biggest food sellers, Target and Supervalu, aren’t taking it well.
When news first broke this morning, Target’s shares sank 11 percent. That’s a reduction of more than $3B, and the lowest the retailer’s shares have been in five years. General Mills shares dipped about 3 percent. Supervalu, although smaller, also took a hit, with shares declining nearly 14 percent.
I know–It’s big news. Sit down. Cool off. Have an asparagus water.
Amazon’s acquisition of Whole Foods is the e-commerce giant’s largest ever, beating out its purchase of Zappos for $1.2B. Amazon said it plans to keep Whole Foods operating independently under its current name. But an investment of nearly $14B indicates bigger plans, and likely a deeper dive into the grocery industry, where it’s dabbled with AmazonFresh.
While Minnesota’s larger companies are hurting after the initial news, it could represent a huge opportunity for local food and agriculture startups.
Lauren Pradhan, director of Grow North, a resource and connection hub for Minnesota’s food and agriculture entrepreneurs, said that while it’s too early to gauge exact effects, the acquisition represents a likely positive, seismic shift in the food industry.
“It’s a game-changer for the industry,” Pradhan said. “It’s an integration of grocery and e-commerce like we’ve never seen before, and everyone will have to take this into account in their business model.”
She added that the majority of Minnesota’s food and agriculture startups are in the natural/better-for-you space, which pairs well with the Whole Foods brand. Some Twin Cities startups, like WholeMe, are already sold in Whole Foods stores.
“I think this will mean good things for [local startups] as Amazon and Whole Foods grow together,” Pradhan said.
Read more about the effect on Minnesota food companies from the Star Tribune here.
And let’s not forget…
Not to be outdone by its competitor, Walmart also made a big purchase this morning, acquiring popular clothing brand Bonobos for $310M.
A move aptly described by Forbes’ Erin Griffith as one company playing chess, and the other, checkers.