Retail

UNFI Plans To Buy SUPERVALU For $2.9B

UNFI

Potentially lessening its reliance on Whole Foods, United Natural Foods (UNFI) said that it would acquire SUPERVALU for $2.9 billion. As it stands, Whole Foods comprises about 33 percent of UNFI’s business, and the grocer’s contract with the distributor is set to end in 2025, CNBC reported.

Through its intended acquisition of SUPERVALU, UNFI gains 3,323 wholesale stores to help with retail distribution. At the same time, the distributor is also buying SUPERVALU's retail business, which operates as brands such as Shoppers and Cub Foods. But UNFI said it is intending to divest it through a “thoughtful and economic manner.” Following the news, shares of SUPERVALU jumped 65 percent, but shares of UNFI declined by 16 percent during trading on Thursday (July 26) afternoon.

Overall, Amazon’s acquisition of Whole Foods and the success it is having with selling fresh food to consumers has sparked countermoves by food retailers, manufacturers and other suppliers. The Wall Street Journal had reported that food retail players are changing their selling strategies as a result of the increase in sales at Whole Foods and its delivery service, which has been enhanced by Amazon.

Based on data from Thasos Group, of the 11 supermarkets analyzed by the research firm, Trader Joe’s and Sprouts customers (8 percent of them) were among the most willing to try Whole Foods after the acquisition by Amazon, largely due to the lower prices. A spokeswoman from Trader Joe’s told the paper that sales are strong and that there is demand for its products, while a Sprouts spokeswoman said the brand is resonating with customers.

As a result of the competition from an Amazon-backed Whole Foods grocery store chain, operators have picked up the pace of plans to invest in online delivery services, and in some cases shortening the investments from five to seven years to two to three years.

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