Whole Foods' Philly-area suppliers see opportunity in Amazon's purchase
Philadelphia-area Whole Foods vendors see great potential in the sale of the high-end grocery chain to Amazon, but they also recognize that the deal, scheduled to be completed Monday, introduces a new level of uncertainty into the food-retailing industry.
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Amazon promised to make a splash Monday when it completes its $13.7 billion acquisition of Whole Foods Markets — by cutting prices on a range of staples such as bananas, butter, and eggs, as well as exotic items such as "organic responsibly farmed" salmon and tilapia.
Also on its price-cut list, published Friday, is organic rotisserie chicken from Bell & Evans, of Lebanon County, though Amazon/Whole Foods has not asked the privately owned company to reduce the price it charges.
"They wanted to know, if they lowered their prices and they needed more chicken because of lowering their prices, do we have enough chicken," Bell & Evans owner Scott Sechler said Sunday.
In fact, Sechler said, during back-to-school time, supplies tighten because families start eating more at home. "If they start running sales and promotions and lowering their margins, it'll give us a challenge, but we will figure out how to keep up," Sechler said of Whole Foods under Amazon ownership.
Like Sechler, other suppliers said they were optimistic about Amazon's takeover of Whole Foods.
"I think it's a positive," said Louis B. Colameco III, chief executive of Wellshire Farms Inc., a Swedesboro company that sells sausages, bacon, and other meat products in all 457 Whole Foods stores in the United States and Canada.
"Now they don't have to worry so much about Wall Street," Colameco said, referring to Amazon's apparent immunity to quarterly earnings pressures. "They can do what they need to do to get the customers back that they've been missing," said Colameco, who contracts with 23 producers, including Martin's Specialty Sausage Co. in Gloucester County.
As to prices, "the way they are going to get to lower prices is by working on lower margins," Colameco said. He doubted that Amazon would rock the boat by getting rid of brands that loyal Whole Foods customers are used to. Colameco has been supplying Whole Foods and predecessor Fresh Fields since 2000. The Wellshire brand is exclusive to Whole Foods.
Accepting lower margins is one way Amazon has made inroads in every new industry it has entered, analysts said. Whole Foods, meanwhile, ended up as takeover bait after its same-store sales stopped growing because competitors adapted and increased offerings of certified organic and fresh foods.
Dietz & Watson Inc., which produces Applegate Farms products that are sold in Whole Foods, is coming at the deal from a different angle than Wellshire.
"We are Amazon's largest and primary premium deli supplier and we are hoping that the merger allows us opportunities in Whole Foods, as well," said Dietz & Watson's chief executive, Louis J. Eni.
Dietz & Watson, which has meat plants in the Wissinoming section of Philadelphia and in Baltimore, as well as a cheese facility in Corfu, N.Y., has a line called Originals, with a small Dietz & Watson logo, that it sells through Amazon.
Meanwhile, Lancaster County farmer Steve Groff is in the thick of food-industry changes. He supplies Whole Foods, test-marketed for Amazon, and is in his first full season supplying Blue Apron, a home-delivery meal-kit vendor that has struggled to maintain its growth.
"This will be interesting to see where this ends up. I feel like I'm right there," Groff said.