Amazon Cutting Whole Foods’ Prices Cost Other Grocers $11 Billion In Value

August 24, 2017, 9:55 PM UTC

On Thursday, Amazon announced its plan to immediately lower Whole Foods’ prices, as well as offer Amazon Prime members a discount on the grocery chain’s infamously expensive products. But organic goods weren’t the only things to get a discount.

The news roughly slashed $11 billion off the market value of five grocery store chains: Shares of Kroger shed 7.6%, Costco dropped 5%, Wal-Mart fell 1.9%, Sprouts lost 7%, while SuperValu slid 6.6%. In total, the market capitalizations of those five chains fell to $324.6 billion between Wednesday and the market’s close Thursday.

The loss doesn’t stop there: Shares of older food giants with few organic products also fell Thursday. Shares of General Mills, Campbell Soup, Kellogg, and McCormick ended the day down 3.5%, 3.3%, 2.8%, and 2.2%, respectively. Other food producers Smucker and Hormel Foods were down as well, but these companies were already bogged down by weak earnings earlier in the day.

Still, shares of food delivery company Blue Apron were up about 0.18% by the market’s close while the S&P 500 Index was down 0.21%. Blue Apron remained steady even though Amazon’s announcement revealed plans to integrate delivery into Whole Foods operations. Not only did Amazon incentivize its estimated 80 million Prime members to shop at its grocer, Amazon said it will also sell Whole Foods’ private-label brands including 365 Everyday Value on its website.

Prior to Amazon’s $13.7 billion acquisition in June, Whole Foods struggled to widen its customer base partly due to its high prices. But with Amazon’s promise to make price-cuts and consumer preferences generally veering towards healthy, organic foods, grocery store investors likely fear that Whole Foods could cut deeper into the market shares of traditional grocers like Kroger—as well as their suppliers.

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