Amazon/whole Foods: Amazon chomps into groceries

Amazon founder Jeff Bezos once described his approach to the publishing industry as like “a cheetah pursuing a sickly gazelle”. Supermarkets are much heftier beasts, but one could sniff the “terror” last week when Bezos’s online behemoth announced its $13.7bn swoop on the US organic giant Whole Foods, said Alex Brummer in the Daily Mail. Shares in America’s biggest grocery chains “plunged in double digits”; over here; Tesco led the fallers. Bezos has gone in “with both feet” – this is Amazon’s biggest ever deal and “the largest transaction ever” in the US grocery sector. Having upended sectors from bookselling to cloud computing, the group (current value: “a shade under half-a-trillion dollars”) now “threatens to revolutionise grocery shopping”.

According to Whole Foods’ CEO John Mackey, the deal started with “a blind date” almost two months ago and was “love at first sight”, said Alex Morrell on Business Insider. But behind the scenes, Mackey was under considerable pressure from an activist investor, Jana Partners, which wanted the company sold, said the FT. Instead, Mackey opted to sell to Amazon on his own terms. Shareholders certainly won’t complain about the ensuing 28% surge in ailing Whole Foods’ shares.

The market sees Amazon’s arrival in bricks-andmortar grocery as “the next leap forward” in its “relentless, ruthless march towards global monopoly”, said John Stepek on Moneyweek. com. The “contrarian” view is that “legacy” grocery businesses clearly aren’t the “white elephants” everyone thought. This deal could symbolise “a turning point, where new-fangled ‘disruption’ gives way to good, old-fashioned, messy, dirty ‘competition’”. And if he fights on their turf, Bezos shouldn’t expect an easy ride from the “dinosaurs” of the grocery world.