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Why Did Amazon Aquire Whole Foods

I'm a Whole Foods and Amazon Customer — but the Acquisition Upset Me

Amazon is buying Whole Foods, and though I'm a customer of both, I raged when I read the headline during my morning commute. I felt utterly betrayed, and the wave of anger went into full tsunami mode. "How dare Whole Foods!" I shouted at my cell phone screen. "Amazon is one step closer to ruling the entire world!" I yelled to puzzled bus riders as I shook my fists. It took me a few hours to calm down, read up on all the details, and get my facts straight.

I responded so emotionally because I've been a Whole Foods customer my entire life, thanks to my mom. We've shopped at Whole Foods since the '80s. I was brought up to value and invest in organic, local, and wholesome foods. Somehow Amazon's acquisition of Whole Foods seems like a threat to that — and to the grocery shopping experience too. However, I didn't want to just seeth; I wanted to learn more. Why did this acquisition take place? What are business analysts forecasting for Whole Foods? And most importantly, would the facts make me want to remain a Whole Foods customer or turn my attention to other brands? Texas Monthly published a feature that helped answer many of those questions, including what events lead to the acquisition and exactly how John Mackey, the CEO and founder of Whole Foods, feels about it. Spoiler: it may have been a hostile takeover.

First, Whole Foods made a few major mistakes from 2015-2016, all of which we witnessed go viral on the internet, and the company couldn't seem to recover from them. In 2015, the New York City Department of Consumer Affairs discovered NYC Whole Foods locations had incorrectly weighed 89 percent of prepackaged foods, overcharging customers a range of 80 cents to $14.84, resulting in a class-action lawsuit that is still ongoing. This, combined with the release of $6 asparagus water and prepeeled oranges infuriated customers, and as the faith in the brand decreased, as did the Whole Foods stock. It plummeted from its all-time high of $65.24 per share to about $30.

"Whole Foods Market is faced with evolving right now — or possibly going extinct."

In addition, Kroger beat out Whole Foods as America's favorite organic grocer in 2017. Over the past few years, grocery competitors have jumped on the trendy organic bandwagon, offering more and more goods for much, much less than Whole Foods. Instead of responding quickly and offering more competitive rates for its groceries, Whole Foods opened a budget grocery store called 365 by Whole Foods. Thing is, there are only four locations with plans to open only a dozen more in the future. And according to the TM article, half of the stores are underperforming.

On April 10, the climax peaks. TM reports, "New York hedge fund Jana Partners announce[d] it has purchased nearly 9 percent of Whole Foods stock and [would] pressure the company to make drastic changes — perhaps forcing it to sell itself or find new leadership," to which Mackey responded, "Yes, we need to evolve. We need to get better, and we're doing that. But these guys just want to sell us, because they think they can make 40 or 50 percent in a short period of time. They're greedy bastards, and they're putting a bunch of propaganda out there, trying to destroy my reputation and the reputation of Whole Foods, because it's in their self-interest to do so." He added, "These people, they just want to sell Whole Foods Market and make hundreds of millions of dollars, and they have to know that I'm going to resist that. That's my baby. I'm going to protect my kid, and they've got to knock Daddy out if they want to take it over."

Despite wanting to protect his business from being sold, it appears Mackey had no choice but to roll with the punches. He explained his two options: "If you think about species that go under extreme environmental pressure, they either evolve or they go extinct. Whole Foods Market is faced with evolving right now — or possibly going extinct." In this instance, he opted for evolving — or rather, survival.

In the official press releases, Amazon promises it will maintain Whole Foods' core mission and values, and though I want to scream "Bullsh*t!" I will try and give them the benefit of the doubt. Perhaps this acquisition will mean Whole Foods prices will become more affordable. Perhaps Amazon will open more Whole Foods locations, especially in food deserts, or perhaps its physical grocery stores will disappear all together. Perhaps Amazon will offset food waste and costs by improving and perfecting grocery delivery. It's all speculation at this point — and stockholders have to approve the acquisition first before any big changes come about.

So the biggest question of all, will I still continue to shop at Whole Foods? I guess the most honest answer is, yes, but I'm not going to let it monopolize me. Trader Joe's is increasingly offering new, healthy products that I like to buy. I love my Costco membership and can purchase things like organic fruit, Amy's vegetarian foods, and wild salmon. In shopping at these locations and others like Walmart and Target, I have developed a very keen sense for the best deals on healthy, sustainable foods. And I know other people like me are doing the same. The most important vote we have as consumers is educating ourselves and exercising our right to grocery shop smartly, brand loyalty be damned!

Image Source: Flickr user cbroders
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