Amazon Buys Whole Foods for $13.7bn: What it Means for FMCG

                                                            16th June 2017
                                                        
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                                                                            3 minute read

If you’re in FMCG, say hello to your new boss. Amazon’s Jeff Bezos.

Today, Amazon didn’t just take over Whole Foods for $13.7bn. The world’s largest online retailer effectively also took over FMCG / CPG (fast moving consumer goods/consumer packaged goods). By buying the premium supermarket chain, the world’s largest online retailer will now set the agenda for innovation, renovation and transformation across the category. So whilst the-Bezos-boss may not deign to turn up to every innovation project you run from now on, you’ll feel his presence.

Why? Because Amazon has just spent 10 times more on Whole Foods than any other acquisition it has ever made. This means Amazon means business in FMCG – just as it did with books, music and movies. When the company that is predicted to become the world’s first trillion-dollar company makes its biggest ever purchase in your sector, change is inevitable. Consider that nearly half of all US households now have Amazon Prime. Or that one in five baby wipes sold online are now Amazon own-label wipes. Or that the popular AI home assistant, Alexa, can take now care of all your grocery needs – automatically. And now with a major upscale supermarket on its books, Amazon can significantly boost the $1300 every prime member currently spends with Amazon.

This is good news for innovation professionals in FMCG. Now we have nothing to lose but our chains, and a brave new world to conquer. Done are the days when innovation meant a new flavour or pack variants. Amazon’s size, and the size of its investment in FMCG, mean that Amazon will set new standards for innovation. We’ll need to up our game in a world where Bezos gives innovations get five-seven years to demonstrate ROI. Of course, not every brand will want to sell, advertise or promote itself on Amazon, nor will every brand want to appeal to AIs such as Alexa as much as humans. But you’ll need strong reasons not to.

Whether you are a brand manufacturer such as Nestlé, P&G, Pepsi, Unilever, ABInBev or Mondelez, or a supermarket such as Wal-mart, Kroger, Tesco, Carrefour and Aldi – you have one pressing question that you need to answer – and that will determine your professional future.

What’s your Amazon strategy?

FMCG just got interesting.