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Amazon has signalled the start of a grocery price war to start on Monday once its $13.7bn (£10.7bn takeover of Whole Foods completes.
The e-commerce behemoth said in a statement last night that the two companies would pursue the vision of making Whole Foods Market’s organic food “affordable for everyone”.
“As a down payment on that vision, Whole Foods Market will offer lower prices starting Monday on a selection of best-selling grocery staples across its stores, with more to come,” Amazon added.
Whole Foods will offer lower prices on a on a selection of best-selling grocery staples across its stores, including bananas, avocados, eggs, salmon, kale, lettuce, ground beef, almond butter, apples, chicken, butter and “much more”.
“We’re determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards,” said Jeff Wilke, CEO of Amazon Worldwide Consumer.
“And this is just the beginning – we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together. There is significant work and opportunity ahead, and we’re thrilled to get started.”
Whole Foods’ private label products—including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch—will also be available through Amazon.com, Amazon Fresh, Prime Pantry and Prime Now.
Amazon Lockers will be available in select Whole Foods Market stores and customers will be able to have products shipped from Amazon.com to their local Whole Foods store for pick up or send returns back when in store.
Amazon and Whole Foods Market technology teams will begin to integrate Amazon Prime into the Whole Foods Market point-of-sale system. When this work is complete, Prime members will receive special savings and in-store benefits.
The two companies plan to invent in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers, Amazon said.
“It’s been our mission for 39 years at Whole Foods Market to bring the highest quality food to our customers,” CEO and co-founder John Mackey said.
“By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market’s high-quality, natural and organic food.
“As part of our commitment to quality, we’ll continue to expand our efforts to support and promote local products and suppliers. We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”
Mackey will remain as CEO and the Whole Foods headquarters will remain in Austin, Texas.
Morning update
After a week or strong gains, Tesco (TSCO) fell back 1% to 185.6p as investors in the UK digested what the Amazon price war would mean to the fragile recovery in the industry. Sainsbury’s (SBRY) fell 0.6% to 235.8p in early trading and Morrisons (MRW), which has a supply arrangement with Amazon, slipped 0.4% to 251.4p. Ocado (OCDO) increased 0.1% to 286.3p, with the City previously anticipating the online grocer could be one of the winners from the Amazon merger with Whole Foods and spooked retailers turned to it for digital support.
In the US, Asda-owner Walmart fell back more than 2%, Costco slumped more than 5% and Target declined by 4%.
Food stocks in the US also took a pasting, with Tyrrells owner Amplify down more than 8%, McCormick falling 2.4%, J.M. Smucker Company plunged 11%, Campbell Soup fell 3.3%, Spam owner Hormel slumped 6% and Kellogg slipped 3%.
On the NASDAQ, Kraft Heinz was down 2.4%, Mondelez fell 2.9% and HAIN Celestial was down 5.7%.
Yesterday in the City
Shares in Greencore (GNC) plunged almost 9% to 190p after the sandwich maker tried to reassure investors over the continued fall in value of the stock during 2017. The listed group has seen its stock fall 23% so far this year, wiping more than £300m from its value, down to £1.3bn.
B&M European Value Retail (BME), Marks & Spencer (MKS), Cranswick (CWK) and Dairy Crest (DCG) also closed in the red, down 2.7% to 365p, 1.9% to 316.4p, 1.4% to 2,946p and 1% to 577.5p respectively.
British American Tobacco (BAT) registered big gains, rising 2.4% to 4,840p, with fellow tobacco giant Imperial Brands (IMB) also up 1.3% to 3,241p. Reckitt Benckiser (RB) increased 0.9% to 7,420p, with SSP Group (SSPG) up 0.8% to 535p and Britvic (BVIC) up 0.3% to 756.5p.
The FTSE 100 nudged up 0.3% to 7,407.06 points as the ONS revealed the UK economy grew by 0.3% in second quarter.
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