While Amazon's acquisition of Whole Foods has yet to be finalized, it has already proven to be disruptive to the American grocery industry. Meal kit delivery pioneer Blue Apron announced plans to slash its target share price Wednesday, one day before the company began trading on the New York Stock Exchange.
“Between Amazon’s logistics and Whole Foods’ fresh inventory and organic foods, the merger of the two companies would almost certainly give Blue Apron a run for its money,” reports Vanity Fair of this decision.
Blue Apron lowered its share price from between $15 and $17 to between $10 and $11 per share. With the new price, the company is valued at about $1.9 billion.
Blue Apron is not the only grocery company to see its value drop since the announcement. On the day that Amazon announced its plan to buy the organic grocery chain, investors pulled billions of dollars from competing companies, with a total market cap drop of $40 billion for the 20 worst-performing food and retail stocks on the S&P.
From the Organic Authority Files
Experts believe that the merger will disrupt the grocery industry to such a degree as to force costs and prices to be slashed throughout.
“Remember the company’s original disruption: bookselling,” writes Fortune. “Jeff Bezos not only shifted how and where books were sold; he also changed how they were made, by forcing publishers, authors, and everybody else along the book supply chain to cut their costs.”
“I would be terrified if I were a consumer packaged-goods company right now,” Benzi Ronen, CEO and founder of food hub management software startup Farmigo told Fortune.
Amazon announced in mid-June that it intended to purchase Whole Foods for $13.7 billion. The announcement came after several months of difficulties for the organic grocery store chain, with seven straight quarters of same-store declines. Whole Foods had been making concerted efforts to improve sales through managerial shakeups and other changes, following the advice of a major investor, the activist hedge fund Jana Partners.