Grocery Bonds Plunge As Amazon Slashes Whole Foods Prices

Amazon has officially owned Whole Foods for less than a day but early channel checks suggest they've already slashed in-store prices by nearly 50% on certain products which is causing some heartburn for grocery bond investors.  Of course, if we owned 6-8 year paper in a business competing with a company who has a demonstrated willingness to consistently lose money for as long as it takes to gain market share, we'd be a little worried too.

As we noted earlier this morning, early examples observed at the Whole Foods store on 57th Street in Manhattan indicated price cuts of up to 43%:

  • organic fuji apples were marked down to $1.99 a pound from $3.49 a pound;
  • organic avocados went to $1.99 each from $2.79;
  • organic rotisserie chicken fell to $9.99 each from $13.99;
  • banana prices were slashed to 49 cents per pound from 79 cents.


Of course, per Statistica, there are roughly 40,000 grocery stores in the United States of which less than 400 are owned by Whole Foods/Amazon. 

So what say you?  A little premature to be throwing in the towel or get out while you can?