Now that Amazon officially owns Whole Foods, the implications to organic and other producers is still being determined.
One person who’s worried is John Nalivka from Sterling Marketing noting that, particularly for beef producers, there are reasons for concern.
“When Amazon comes out and says they don’t have to make money in the grocery store after they buy Whole Foods, I think that tells you a lot. They’re going to make this thing more competitive particularly on these branded and niche programs. I think they’re put enough pressure on them [producers] that they’re not going to be able to have that premium margin on those items at the very minimum.”
The premium prices charged at grocery stores are often necessary to pay the producer who has a higher overhead to raise those cattle.
Nalivka said some of his concerns come out of the nature of who Amazon is.
“What it all comes down is just the fact that Amazon is a disruptor to markets and they’re going to and they’re going to disrupt this market just like they did Kohls, Target and these other retail stores that thought Amazon won’t touch us.”
There could also be a major timing change when it comes dealing with a perishable product that Amazon could disrupt as well.