The battle lines are being drawn in the Federal Trade Commission's (FTC's) move to stop Whole Foods Market from merging with Wild Oats. (See June 5 press release.) If you're an Indie business owner selling natural or organic products, you'll want a ring side seat for this one. Why? Because if the merger goes through, it will define the market for natural products for the next generation.
Whole Foods has 194 stores, 15 of which were opened in the past 12 months. (See May 9 press release.) The Wild Oats website says the company operates 110 stores. Surely both numbers will climb if the companies remain distinct. But if they merge, the numbers will most certainly decline since history has proven that mergers almost always precede layoffs and store closings. The FTC's court action seeks to block the merger on the grounds that it would violate antitrust laws because the resulting company would have a virtual monopoly in the natural and organic foods market.
If the merger goes through, I predict that the resulting company will quickly gobble up smaller natural retailers like North Carolina-based Earth Fare, which operates 14 stores throughout the southeast. The other result will be fewer potential retail accounts for Indies like Melsadis, which recently landed its Brown Sugar Body Scrub on the shelves of a California-based Whole Foods store, and other Indie Beauty Network members.
If the FTC is successful at blocking the merger, it will be the first governmental recognition of the natural and organic market as separate and distinct unto itself. Makes me wonder what could be next. If we are a distinct market, should we be regulated differently? Should we be monitored differently? Should we have to comply with regulations that non-natural and organics don't have to? Only time will tell.
What do you think mergers like these mean for your small business? Is bigger always better? Would you rather see one — maybe two — natural and organic market choices? Or would you rather be able to sell your products to and buy products from a variety of Indie stores throughout the country? Are Whole Foods or Wild Oats buyers responding to you differently since the merger announcement?