Cracked Oats

by Osman Parvez
---- Well, maybe not after all.

It looks like the acquisition of Wild Oats by Whole Foods will be challenged because the Fair Trade Commission (FTC) believes it will reduce competition and quality and drive up prices. According to the Wall Street Journal, "In its investigation, the FTC uncovered evidence that Whole Foods saw the deal as a way simply to eliminate its main rival in dozens of cities, lawyers close to the case said."

Sounds like someone at Whole Foods forwarded an email, doesn't it?

I wrote about the proposed merger February and the post drew some interesting comments. One (Gecko) wrote, "Let's face it, we have no idea in light of the merger whether prices will stay astronomical, or whether they will decrease to relatively affordable levels (finally) at Whole Foods stores." and "All I know is that reduced competition (i.e., fewer genuine natural foods stores) = reduced choice for consumers, which often translates to higher prices for consumers. We shall see..."

Looks like the FTC is seeing things your way Gecko.

From a real estate perspective, there are two projects which could be affected. Prior to the announcement of its acquisition, Wild Oats was planning to occupy a flagship store at 29th Street. Whole Foods meanwhile has a major upgrade planned for it's Boulder store on Pearl. And as for all those local jobs, retail and corporate? We shall see...

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  1. Something really kind of interesting is how the natural and organic food movement is changing so quickly.

    Things started very grassroots with small independent farmers, small independent food stores and co-ops. Now it is really going big money corporate with branding, celebrity endorsements, stock market shares, corporate takeovers and now even FTC investigations... Things kind of went from grassroots independent to yuppie corporate (McOrganics).

    I have to admit this has made more organic foods availble to me at a cheaper price and its probably good for jobs and the economy as.

  2. I can't afford to shop there NOW, let alone when they merge.

    But for me, it does smack of a monopoly.

  3. Why is there no Trader Joes in Boulder? (ie. What have we done to deserve this? :)

  4. For those who follow the stats, there was a 6.6% decline in YOY median:

    May 2006 $560K median
    May 2007 $525K median

    On the plus side, the lower median led to increased number of sales. So the logjam from last month is getting better as prices drop.

  5. It will be interesting to see how this all plays out. It could definitely have some implications on the market.

  6. Median prices were almost 15% higher in Feb 07

    Which means if you bought the median house in Feb, and you need to sell soon with transaction costs, then you are down over 20% = $120K Wow!

    That's at the level of just stopping the mortgage payment and letting the bank have you stay for free for a while.


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This document contains forward-looking statements. You are strongly cautioned that investment results are subject to business, economic and other uncertainties. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time. Always consult your financial advisor before making an investment decision.